Are we at the beginning of a market crash? The honest answer is that it is too early to make that call. However, the S&P 500 has trended downward in the last few trading sessions as I write this, and the cyclically-adjusted price-to-earnings ratio known as the Shiller P/E ratio is at 41, a level last seen near the peak of the dot-com boom. Some investors are starting to worry about a crash.
Moreover, some growth stocks may be in a sort-of crash of their own as they sell for well below all-time highs. This appears to be the case with Latin American e-commerce conglomerate MercadoLibre (NASDAQ: MELI), which is roughly 35% off its high. Nonetheless, instead of running away, investors may want to consider adding shares of the consumer discretionary stock, and here’s why.
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Why investors are selling MercadoLibre
MercadoLibre has succeeded by turning Latin America’s challenges into successful businesses. The company became a regional fintech leader by first providing financial products to cash-based customers frozen out of the banking system. It also built a logistics business to address a lack of shipping options.
However, some of the company’s decisions may have alarmed investors. In the e-commerce business, it has reduced prices to compete, and investors did not react well to the lower margins that resulted. In its fintech enterprise, Mercado Pago, it increased loan volumes at a faster rate than revenue, and again, investors seemed to become leery when it had to cover more loans that customers were not repaying.
The reaction was understandable, as net income growth that was once well into the double digits slowed to just 5% annually in 2025. More recently, year-over-year profits fell by 16% in the first quarter of 2026.
Why MercadoLibre is still a buy
Still, investors need to know that MercadoLibre has a considerable growth runway, as evidenced by its revenue growth. In 2025, revenue increased by 39% year over year, and it increased 49% YOY in Q1 2026.
That shows the potential for massive profit growth if it can address some of its business challenges. The company has accepted lower margins as it solidifies its hold on the marketplace, and that could ultimately serve it well in the long term as more of its peers find themselves unable to compete.
On the fintech side, it has begun to more strictly limit loan amounts to mitigate potential losses. Additionally, it’s using AI to rate borrowers and thus make it less likely to loan money to customers unable to repay their loans.
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