The Investor's Podcast · Nov 7, 2026 · 1h 4m · 55m saved
With Daniel Mahncke, Analyst at The Investor's Podcast Network and co-manager of its Intrinsic Value Portfolio · Shawn O'Malley, Analyst at The Investor's Podcast Network and co-manager of its Intrinsic Value Portfolio
Mercado Libre just reported its 31st consecutive quarter of revenue growth above 30%, with revenue up 45% to $10.75 billion, yet its operating margin fell to roughly 7%, the lowest in four years. Daniel Mahncke and Shawn O'Malley, who run the Intrinsic Value Portfolio on The Investor's Podcast, answered that drop by adding to the stock rather than selling it.
"We just increased the weighting of Mercado Libre in our intrinsic value portfolio from 5 to 7%... that now makes Mercado Libre our fifth largest position." — Shawn O'Malley
Daniel first pitched the company to the portfolio and built the updated valuation model; Shawn frames the portfolio decisions. Both spent the episode on one question: whether the margin compression comes from competition or from the cost of growing a credit business fast.
The full episode is covered here so you can skip it. 64 minutes of audio, 9 minutes of reading.
Here are the 10 takeaways that matter.
Key Takeaways
About 5 points of lost margin trace mostly to day-one loss provisioning on new credit cards, which Shawn calls an accounting timing issue rather than a result of competition from Shopee
Mercado Pago processes more payment volume off Mercado Libre's marketplace than on it
About $109 billion last quarter, against roughly $22 billion of marketplace sales
Credit quality has held up despite 75% loan growth, even as Brazilian household delinquency hits a 15-year high
Free shipping is a deliberate response to Shopee, and neither side is cutting the fees it charges sellers
Mercado Libre's sales in Brazil are still about 2.5 times Shopee's, even though Shopee now sells about as many items
Amazon spent about 20 billion reais in Brazil in 2025 and its market share stayed flat at 11%
Daniel's model gives a fair value near $3,000 a share, or $2,400 after a 20% margin of safety
1. Why They Added to MELI
Mercado Libre is a holding in the Intrinsic Value Portfolio, and the two came back to check the thesis after raising its weighting during a live portfolio-review stream.
Mercado Libre's growth streak is the longest Daniel knows of at its size
"Mercado Libre is the only company ever at significant size that was able to grow 30% or more for 30 consecutive quarters straight." — Daniel Mahncke
The stock still trades below the price at which Daniel first pitched it. The reason is profitability: margins have fallen by close to half in two years.
"What has really happened here to current margins is it's been a downward slope from 12% to a little less than 7%, and that's the lowest margins have hit in four years." — Daniel Mahncke
That decline is the tension the rest of the episode tries to resolve. If competition caused it, the thesis weakens; if it reflects an investment cycle, the long-term case holds.
