We recently published a list of the 13 NASDAQ Stocks with the Highest Upside Potential. In this article, we are going to take a look at where MercadoLibre Inc. (NASDAQ:MELI) stands against other NASDAQ stocks with high upside potential.
On April 7, Dan Ives of Wedbush Securities joined CNBC’s ‘Squawk on the Street’ to discuss how the current tariff environment could impact tech supply chains. Musk’s actions and Trump’s tariffs have contributed to broad economic uncertainty, which Ives also referred to as the economic Armageddon for US tech in an earlier conversation. He expressed concern about the structural supply chain challenges posed by recent tariffs and geopolitical tensions. Ives highlighted that the US tech sector has historically maintained an edge over China but this could be wiped out if manufacturing were relocated to the US. The logistical hurdles of building manufacturing plants in the US are not negligible and it would take 4 to 5 years to establish facilities capable of sustaining production levels comparable to those in Asia.
He also acknowledged that he hasn’t downgraded major stocks like the ones in MAG7 but remains cautious. If these previously highlighted issues persist for months, Ives anticipates drastic cuts in earnings. This uncertainty surrounding tariffs could lead to lower demand for emerging technologies like AI and cybersecurity. He explained that this situation could severely impact the US tech companies and lead to broader cuts across the tech sector — potentially up to 25% in earnings. He also criticized Elon Musk’s political involvement, which he believes has caused permanent damage to his brand and customer base. He estimated a 20% demand destruction in Europe and 10% in the US.
We used the Finviz stock screener to select the 13 stocks with the highest analysts’ upside potential (at least 35%) as of April 8. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A customer using their phone to access an online commerce platform.
Average Upside Potential as of April 8: 40.69%
Number of Hedge Fund Holders: 96
MercadoLibre Inc. (NASDAQ:MELI) operates online commerce platforms internationally. It operates the Mercado Libre Marketplace which can be accessed through the mobile app or website. It also offers a fintech solution platform called Mercado Pago and an advertising platform called Mercado Ads among other similar platforms.
In 2024, the company significantly expanded its credit card business and issued 5.9 million new credit cards, which doubled the company’s existing credit portfolio. Such investments temporarily impact profit margins but the long-term profitability of these credit card ventures is secure. The Mercado Pago platform also achieved 60 million monthly active users this year.
The company is now optimizing payment processing times for its POS devices. It’s also used open finance to refine credit scoring and increase credit limits for merchants. MercadoLibre Inc. (NASDAQ:MELI) aims to capitalize on the opportunities presented by the underserved financial markets in Latin America. Furthermore, the company’s advertising revenue grew 37% year-over-year in 2024.
Infuse Asset Management is optimistic about the company despite potential future competition and stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its Q4 2024 investor letter:
“Staying in Latin America, MercadoLibre, Inc. (NASDAQ:MELI) continues to spin its commerce/payments flywheel. While it started out as an e-commerce platform, its fintech business is now much larger. When management pulled back on giving out loans for fear of a worsening economy, overall revenue growth picked up with accelerating GMV in the core e-commerce business. Then, the finance business segment started to reaccelerate when the team realized nonperforming loan ratios were lowered than expected. But the segments aren’t fully independent. There is a beautiful synergy as on-platform payments lower the friction for the commerce business and faster delivery times lead to more orders and therefore more payments. Meanwhile, MELI also offers a plethora of tools for merchants in both commerce and finance. The company is still growing more than 30% and it has a leading brand in Latin America. Someday Nu and MercadoLibre will bump up against each other but I think we still have at least 5 years before they start competing head-on. For less than 30x forward earnings, the valuation is still reasonable for the company.”
Overall, MELI ranks 10th on our list of NASDAQ stocks with the highest upside potential. While we acknowledge the growth potential of MELI, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MELI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.