MercadoLibre
MercadoLibre
MELI
6.37%
3%
- MELI stock cleared handle buy point of 1,018.10
- In longer consolidation with 1,095.44 buy point
- Has risen above 200-day moving average line
Industry Group Ranking
Emerging Pattern
Cup with Handle
A positive chart pattern named such because it resembles the outline of a coffee cup with a handle. The pattern can last from seven weeks to as long as a year, but most are three to six months.
MercadoLibre (MELI) is the IBD Stock Of The Day as the largest e-commerce company in Latin America gains momentum. MELI stock entered a buy zone on Tuesday.
XBased in Buenos Aires, MercadoLibre is the largest provider of e-commerce services in Central and South America. It has a big leg up on industry behemoth Amazon.com (AMZN) in its own backyard.
On Tuesday, MercadoLibre stock cleared a cup-with-handle base at a buy point of 1,018.10. The buy range extends to 1,069.01. MELI stock climbed 6.4% to close at 1,020.68 on the stock market today.
MELI Stock Jumps On Earnings Report
MercadoLibre stock has been gaining since the company posted third-quarter earnings on Nov. 3. Its results beat expectations, signaling that it's on track to expand across Latin America while improving profitability.
The company reported revenue of $2.7 billion on a foreign-exchange basis, matching estimates. Revenue jumped 60.6% from the year-earlier period. It reported adjusted earnings of $2.56 a share, topping estimates of $2.31.
Total gross merchandise volume jumped 32% to $8.6 billion in the quarter.
For the year, analysts expect revenue of $10.4 billion, up 49% from the prior year. The consensus estimate for adjusted earnings is $8.42 a share, up more than 400%.
"Our commerce business continues to show resilience amidst macroeconomic challenges and as physical retail fully reopens," said Pedro Arnt, chief financial officer, during the company's earnings conference call with analysts.
Gaining Ground After Testing Support
Following the earnings report, MELI stock retook its 200-day moving average line. The stock also gained more ground after testing support at its 50-day moving average.
In addition, its relative strength line is moving into higher ground. The RS line compares a stock's performance with that of the S&P 500. When the RS line is climbing, it means a stock is outperforming the benchmark index.
The company has an Accumulation/Distribution Rating of A-, which indicates heavy buying among institutional investors.
MELI stock's chart shows a large number of gains in heavy volume during the current consolidation.
IBD has added MercadoLibre to its Leaderboard and SwingTrader stock lists.
In addition to providing an e-commerce marketplace for buyers and sellers, with 127 million active users, MercadoLibre hosts platforms where users can create online stores. It also provides financial services technology.
Providing Online Financial Services
MercadoLibre's financial business, called Mercado Pago, allows users to make contactless payments, pay utility bills, make peer-to-peer transactions and pay for transportation tickets, among other things. It has more than 40 million users.
The bulk of company revenue comes from Argentina, Brazil and Mexico. The remainder comes from Colombia, Costa Rica, Chile, Venezuela and Ecuador, among other countries. In total, MercadoLibre operates in 18 countries.
The IBD Stock Checkup tool shows that MELI stock has an IBD Composite Rating of 76 out of 99. The rating means MELI stock currently outperforms 76% of all stocks in terms of the most important fundamental and technical stock-picking criteria.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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