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MercadoLibre Tops $50 Billion in Value Amid E-Commerce Boost

Bloomberg logoBloomberg 7/6/2020 Vinícius Andrade

(Bloomberg) -- Shares of Latin America’s largest e-commerce marketplace MercadoLibre Inc. climbed above $1,000 for the first time as online sales surge in the region amid the coronavirus pandemic.

Up 78% this year, MercadoLibre has benefited from a growing number of consumers that are either buying online for the first time or increasing the frequency of their purchases because of virus-related lockdowns. The company said gross merchandise volume growth accelerated to 73% in April and UBS Group AG pointed to even stronger figures for the industry in May, citing data from Nielsen’s e-commerce researcher Ebit.

“Recent sector data makes us more confident that Brazilian e-commerce growth could deliver on high expectations,” UBS Group analysts led by Gustavo Piras Oliveira wrote in a report dated June 3, reaffirming MercadoLibre as their top pick in the sector and raising the stock’s price target to $1,040.

a screenshot of a cell phone: MercadoLibre has climbed more than 5,600% since its IPO in 2007 © Bloomberg MercadoLibre has climbed more than 5,600% since its IPO in 2007

The Buenos Aires-based company, which counts Brazil as its largest market and has been focusing on consumer packaged goods, saw its market value jump to a record $50 billion, compared to $39 billion for EBay Inc. The stock gained as much as 4.8% to $1,036 in New York.

Even as some countries start to ease their social-distancing measures, Bank of America Corp. believes the tailwinds will last for longer. “While some expect a channel reversion to physical retail as malls and stores re-open, we think behaviors are likely to prove sticky,” BofA analysts led by Robert Ford wrote in a report dated June 9, raising MercadoLibre’s target price to $1,100.

Read more: It Took a Pandemic to Get Latin Americans to Buy More Online

The company’s payments and wallet platform MercadoPago is also attracting bullish views, as lockdowns across the region push users to make payments online. Morgan Stanley expects total payment volume off-marketplace to grow 70% in 2020 and 69% in 2021.

(Updates with chart, stock move throughout.)

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