MercadoLibre shares jumped after Brazilian candidate Flávio Bolsonaro outperformed polls in the first round of voting, a result investors read as a sign of tighter fiscal policy ahead of an Oct 25 runoff against Lula. The stock remains well below its 52-week high even after the rally, and the rebound comes alongside a shrinking gross margin and rising credit risk in Brazil's consumer lending market.
MercadoLibre (MELI) traded at $1,846.85, up 8.86%, as of Oct 5, 2026, 1:23 PM EDT. Brazilian candidate Flávio Bolsonaro captured roughly 47% of the first-round vote, beating polls, and now faces Lula in an Oct 25 runoff.
Brazil's vote drives the rally
Markets read Bolsonaro's showing as a sign of tighter fiscal policy and a friendlier business climate. U.S.-listed Brazil names rallied together, and MELI moved higher overnight alongside Nu Holdings (NU). The broader U.S. indices were flat, so the move is regional rather than macro.
MELI's market cap is about $93.3 billion, yet the stock sits well below its 52-week high of $2,428. It is down 15.0% over one year. The stock had also fallen 6.65% over the past month before today's jump.
Growth is outpacing profit
Revenue grew from $7.07 billion in 2021 to $28.89 billion in 2025, roughly a fourfold increase. Net income reached $2.00 billion in 2025, up only slightly from $1.91 billion in 2024, so profit is no longer keeping pace with sales.
Gross margin slid from a 58.0% peak in 2023 to 50.7% in 2025, likely driven by credit and logistics investment. The stock's P/E ratio stands at 50.1x trailing and 44.0x forward, against a fair value estimate of $1,957, or 6.0% upside. FY2026 EPS is expected at 38.17, below FY2025's 39.40, before an expected jump to 55.03 in FY2027.
Earnings beat, stock fell anyway
In its Q2 report on Aug 5, MercadoLibre beat on EPS (9.19 vs 8.75) and revenue ($10.17 billion vs $9.66 billion), yet the stock fell 3.1%. Three of the last four quarters missed on EPS, pointing to margins as the sore spot.
Q3 earnings are due Nov 4, 2026, with consensus at EPS of 9.25 and revenue of $10.57 billion. The Oct 25 Brazil runoff could extend or reverse today's rally.
According to Reuters, as cited in the report, neobank card delinquency reached 20.31% in 2025, against 7.71% in 2021, and Mercado Credito's lending rates stood at 178.69% as of Sep 18, 2026. Brazil's benchmark interest rate is 14%, keeping credit risk in that lending book a central concern for the bear case.
Today's gain is event-driven, so it could fade.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
