Mercado Libre upgraded to investment grade ‘BBB-’ by Fitch
MONTEVIDEO, Uruguay; October 31, 2024 – Mercado Libre, the leading e-commerce and fintech platform in Latin America, informs that its Foreign and Local Currency Long-Term Issuer Default Ratings (IDRs) was upgraded by Fitch Ratings to an investment grade level 'BBB-', Stable Outlook.
According to Fitch Ratings, “the upgrade for MercadoLibre, Inc. (MELI) reflects its strengthened business and financial profile following consistent growth rates and market share expansion in the last years, its larger scale and increasing cash flow contribution from Mexico. MELI’s track record of successful execution combining growth and profitability and its diversification into several verticals provide it with key competitive advantages difficult to replicate”. Also embedded in the upgrade “is MELI’s robust financial flexibility, conservative capital structure and positive long-term demand fundamentals for e-commerce, digital payments, credit and advertising in Latin America”.
Martín de los Santos, Mercado Libre’s CFO, stated: “Achieving investment grade status reflects the strength of our ecosystem’s business model and the significant growth opportunities ahead. As Latin America’s leading e-commerce and fintech platform, we are uniquely positioned to harness the transformative shifts shaping the region’s digital landscape. This milestone motivates us to continue advancing our mission of democratizing access to commerce and financial services.”
Fitch stated that “MELI's (...) ability to cross sell among the several verticals of its ecosystem leads to higher customer loyalty, lower customer acquisition costs (CAC) and higher conversion rates, enabling the company to grow above peers while maintaining adequate profitability even under adverse economic environments”.
The report also affirms that “financial services will continue to secure robust growth rates in the coming years as MELI expands its credit origination and financial services in Brazil and Mexico”. Low penetration of digital payments in the region and a large unbanked population “offer high growth opportunities in the next few years”.
Fitch's rating action commentary is available here.
https://www.fitchratings...utlook-stable-31-10-2024