Lately, there has been a growing sense of negativity among investors regarding the market. Following a disappointing jobs report at the beginning of August, significant declines were observed in the stock market indexes. Additionally, the news of Warren Buffett significantly reducing his large positions also contributed to the pessimism. Apple and America’s Bank may not have increased investor trust.
These market declines do not imply that certain stocks cannot do well during the crisis, as some stocks have displayed signs of improvement. Investors who are still interested in long-term investments could potentially benefit from leading e-commerce firms such as MercadoLibre ( MELI 0.76% ) and Shopify ( SHOP 1.09% ) .
MercadoLibre
MercadoLibre excels in dealing with challenging situations, especially in Latin America where political and economic instability is common. Despite the region’s issues, MercadoLibre has shown impressive performance with a 20% rise in gross merchandise volume. While sales in Argentina were lower, the company’s success in Brazil and Mexico made up for it.
Additionally, MercadoLibre, known to a large number of investors, runs a financial technology division known as Mercado Pago. This division enables consumers who prefer cash transactions to make purchases on MercadoLibre and has also ventured into providing fintech solutions to other businesses following its significant achievements. The ongoing expansion of this sector has contributed to a 36% increase in the company’s overall payment volume compared to the previous year.
Furthermore, Mexico remains a key area of interest for Mercado Envios, especially in terms of its logistics and fulfillment services. The company has implemented expedited shipping options, such as same-day and next-day delivery, across Latin America. In a new development, Mercado Envios has established a fulfillment facility in Texas to facilitate the distribution of American products into the Mexican market. This move is expected to enhance the company’s market presence and expand its reach.
The increasing power resulted in a revenue of $9.4 billion during the first half of 2024, showing a 39% rise from the corresponding period in 2023.
It is true that MercadoLibre faced challenges as its operating expenses increased more quickly than its revenue. As a result, the company had to raise its provisions for doubtful accounts by 74% in the first two quarters of the year, which impacted the growth of its operating income. However, despite these challenges, the company’s net income still saw a significant annual growth of 89% to $875 million. This growth was supported by decreased foreign currency losses and lower income tax expenses.
However, that information caused the stock price to rise by over 40% in the past year, positioning it as one of the few stocks close to its highest value in the last 52 weeks. As a result of these increases, the price-to-earnings ratio… (P/E) Currently standing at 67, the figure may seem elevated, but it is important for investors to keep in mind its equivalent in the United States. Amazon It had a higher valuation for most of its past.
Additionally, MercadoLibre’s The ratio of a company’s stock price to its revenue is known as the price-to-sales ratio (P/S). The price of MercadoLibre is currently at a low point compared to previous years, indicating that it may still be a good time to invest in the company even though its stock price is increasing.
Shopify
Shopify takes a unique approach to e-commerce by empowering businesses of all sizes to run their own online stores, rather than relying on a large platform. Its user-friendly platform enables merchants to set up and manage their e-commerce sites without the need for coding skills. Additionally, Shopify provides tools that allow for a high level of customization in terms of website design.
Additionally, Shopify provides a platform that caters to various additional needs related to its clients’ online retail business. This may involve managing transactions, running email campaigns, and overseeing stock levels, irrespective of whether the transactions occur on the internet or in physical stores.
Moreover, by introducing Shopify Plus, the company has broadened its focus from assisting small and medium-sized enterprises to also targeting large corporations as customers. This shift has resulted in some surprising teamwork ventures, such as Shopify’s recent alliance with… Target Enables merchants to list their products on Target’s platform, broadening Target’s offerings and providing merchants with visibility on a prominent retail platform.
With Shopify’s partnerships and advancements in technology, it may not come as a shock to investors that its revenue in the first half of 2024 surged to $3.9 billion, marking a 22% growth from the previous year. In the first six months of the year, Shopify incurred a loss of $102 million, with a profit of $171 million in the second quarter. This is a significant improvement from the $1.2 billion loss in the first half of 2023, mainly due to a one-off impairment charge of $1.3 billion from the divestiture of the logistics segment.
Shopify’s stock has seen a positive impact from clearing itself of charges and becoming profitable on a quarterly basis. Although there was a notable decline earlier this year, the stock has increased by around 15% in the past year.
Due to its recent financial setbacks, Shopify does not have a trailing P/E ratio at the moment. However, its P/S ratio stands at 12, which is close to the stock’s lowest levels in recent years and significantly below its typical average of 22. With the anticipation of profits rebounding, ongoing rapid revenue growth, and potential increases in multiples, Shopify may transform into a competitive investment opportunity. multibagger , including those who are new to investing.
