Mercadolibre Inc (MELI), Amazon.com, Inc. (AMZN): Getting It Wrong, This Stock Is a Winner

Mercadolibre Inc (NASDAQ:MELI) runs a rich P/E in the fifties, with a projected P/E in the thirties. However, this is half of Amazon’s projected P/E which is in the eighties, and is currently trading at an earnings loss. eBay Inc (NASDAQ:EBAY) is another also-ran in Brazil, given it remains focused on the “opportunity for enormous growth” in the market, rather than delivering on it. Given the criticism of Brazilian custom processing times by non-Brazilian eBay members selling to Brazilians, it’s likely that Brazilians have restricted themselves to buying and selling within the Brazilian market to avoid such delays.

But even here, MercadoLibre has an advantage by its association as eBay Inc (NASDAQ:EBAY)’s Latin American partner, allowing it the opportunity to provide the market the parent eBay can’t, for reasons outside of its control. eBay’s subsidiary, PayPal, is enjoying success in Brazil but fell short of initial expectations. The PayPal platform is restricted because of infrastructure needs: there are significant challenges in Brazil, where it’s harder — and more expensive — to offer stable and secure internet access across the country. In this regard, mobile commerce is seen as a more viable option for Brazil going forward.

Mercadolibre Inc (NASDAQ:MELI) holds all the cards in Brazil, and likely has the advantage in Argentina and Mexico. It’s larger U.S. rivals have struggled to gain a foothold: eBay Inc (NASDAQ:EBAY) will probably look to the Amazon experience to decide whether more resources should be given to this market. As for Amazon.com, Inc. (NASDAQ:AMZN), it will probably be next year before the company will be in a position to offer numbers on its Brazilian operations. The weakness of its rivals has given MercadoLibre a bit of a price premium. Until Amazon and eBay unlock their potential in the region, MercadoLibre remains the Latin American e-commerce play.

The article Getting It Wrong: This Stock Is a Winner originally appeared on Fool.com and is written by Declan Fallon.

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