Another hidden risk: Here (Argentina) MELI's revenue is in 'pesos' (local currency), and our socialist government tends to maintain a lagging relationship in the exchange rate between the dollar and the peso. I mean, in 2022, the real annual inflation (in 'pesos'), was arround 95%, and the dollar 'advanced' arround 70%, so -at least in Argentina- the MELI's revenue (in dollars) should be inflated (because of the currency relation). It happens almost every year. There is a constant artificial currency lag between the 'peso' and the 'dollar', so the revenue and earnings of Argentinian companies (translated to dollars) are 'inflated'. I know Argentina is not the biggets MELI's market, but it's something to consider.
haha, it is worse than you think. Im sorry to break your illusions, but those are not default loans. It is just a way they have found to take money tax free out of the system. It is obvious to anybody who has lived in these countries and seen how they operate. They will keep "adjusting" this "loss" as they see fit in the future. If investors and media scream up they will down size the flow of black money out. They will find a "healthy" balance :)
Good insights, Brian! Credito is a concern, but they've pumped the brakes on originations and have made adjustments to improve spreads and asset quality. I feel pretty confident they'll figure it out. The rest of their business remains robusto.
Could argue nowhere in South America things are good… how is it looking today, 8 months after your comment? Greetings from the other side of the world ;)
The vid title you may call click bate, but it dishonest! You made it up some existential, turns out something trivial and insignificant for a long while
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Another hidden risk:
Here (Argentina) MELI's revenue is in 'pesos' (local currency), and our socialist government tends to maintain a lagging relationship in the exchange rate between the dollar and the peso. I mean, in 2022, the real annual inflation (in 'pesos'), was arround 95%, and the dollar 'advanced' arround 70%, so -at least in Argentina- the MELI's revenue (in dollars) should be inflated (because of the currency relation).
It happens almost every year. There is a constant artificial currency lag between the 'peso' and the 'dollar', so the revenue and earnings of Argentinian companies (translated to dollars) are 'inflated'.
I know Argentina is not the biggets MELI's market, but it's something to consider.
How long is the lag?
socialism=poverty
haha, it is worse than you think. Im sorry to break your illusions, but those are not default loans. It is just a way they have found to take money tax free out of the system. It is obvious to anybody who has lived in these countries and seen how they operate. They will keep "adjusting" this "loss" as they see fit in the future. If investors and media scream up they will down size the flow of black money out. They will find a "healthy" balance :)
What makes MELI not score in the “high-quality business” on Feroldi’s quality score card?
The bad debt reserve is almost 10% of the revenue. Also the liabilities is going up.
Good insights, Brian! Credito is a concern, but they've pumped the brakes on originations and have made adjustments to improve spreads and asset quality. I feel pretty confident they'll figure it out. The rest of their business remains robusto.
Glad you are keeping an eye on this part of the business, thanks for vid.
The biggest risk - Argentinian socialism. I live in Brazil and things are not good.
Could argue nowhere in South America things are good… how is it looking today, 8 months after your comment? Greetings from the other side of the world ;)
I wonder what is their proportion of its whole year credit sale to total sale
Excellent review Brian!
what is inherent risk MercadoLibre needs to deal with coming from Latin American economy?
A lot: inflation, higher interest rates, dramatic changes in laws and governments.... it's pretty commom here (I'm from Brazil).
MELI is a beast of a company that will compound > the market over the long term IMO
I agree it makes up 41% of my portfolio it better Ahha
Busco estufa
The vid title you may call click bate, but it dishonest!
You made it up some existential, turns out something trivial and insignificant for a long while
I don’t agree with your comment. About $1 Billion annually is a bad debt. The whole revenue is $10 Billion.
I’d say it’s a major risk.
Agreed. I like the Brian's work but the click bait dramatic video titles are growing a little tiresome.
@@MrJayLale Sadly most people can't see past the tip of their noses.
It's time to issue a dividend!
Absolutely not!