In turn, the profit for the period in question represented a 533% growth compared to the third quarter of 2020. While, in terms of revenue, MercadoLibre reached a turnover of 1,857 million dollars, in line with the market consensus and reflecting an increase of 66.5% in year-on-year terms. The good results reported were read positively by the market and the action of the technology company reflected a rise of almost 10% during the next 4 rounds.
The sale of its shares for US $ 1,550 million generated uncertainty
However, after reaching that maximum, the price began its decline. Precisely, on Monday, November 15, the company reported in a press release, the sale of 1 million shares at a value of US $ 1,550 each, generating a 5% drop the following day.
The objective of this measure was to accelerate various investments aimed at improving logistics. This situation, which could be interpreted as something positive in the previous one, was not taken as such. In fact, As it occurred in the midst of a context of high volatility in the North American markets (with the VIX index reaching 28 points), the selling pressure on the company’s shares was greater than expected and took several investors by surprise.
The recent rise in volatility was a consequence of fears of a tighter monetary policy by the US Federal Reserve, which plans to take measures to try to contain inflation, and simultaneously with the appearance of the new strain of the coronavirus ” Ómicron ”.
Therefore, During the last two weeks, there has been a phenomenon of “flight to quality” among investors, that is, a repositioning of portfolios in companies with large market capitalization with good financial results, but, above all, with high levels of cash availability. Precisely, this was one of the points that explained Apple’s rise in a bear market context and where technology companies were among the most affected, including MercadoLibre.
Finally, in addition to all of the above, we cannot fail to emphasize that Mercado Libre participates in one of the fastest-evolving segments, such as the one related to electronic commerce. In this sector the competition is high, and the continuous emergence of new players, such as Sea, for example, puts the market share and future revenue generation at stake.
Equity Analyst at IOL (invertironline)
Source From: Ambito
