According to Fitch Ratings, “the improvement in Mercado Libre’s rating reflects the strengthening of its business and financial profile following the constant growth rates and the expansion of its market share over recent years.
The rating agency Fitch Ratings raised Mercado Libre’s (MELI) long-term credit rating in foreign and local currency to investment grade “BBB-”, with a Stable Outlook. as reported by the leading e-commerce and fintech platform in Latin America.
According to Fitch Ratings, “The improvement in Mercado Libre’s rating reflects the strengthening of its business and financial profile following the constant growth rates and the expansion of its market share over recent years, its greater scale and the growing contribution of Mexico to the company’s cash flows. MELI has a track record of successful execution that combines growth and profitability, and diversification into several verticals that provide it with key competitive advantages that are difficult to replicate.”
Other elements that justify this improvement in the MELI rating “are its solid financial flexibility, conservative capital structure and positive long-term demand fundamentals for e-commerce, digital payments, credit and advertising in Latin America.”
Martin de los Santos, financial director of Mercado Libre, declared: “Achieving investment grade status reflects the strength of our ecosystem’s business model and the growth opportunities ahead. As Latin America’s leading e-commerce and fintech platform, we are uniquely positioned to take advantage of the transformations shaping the region’s digital landscape. This milestone motivates us to continue advancing our mission of democratizing access to commerce and financial services.”
Fitch stated that “MELI’s (…) ability to cross-sell across the various verticals of its ecosystem translates into higher customer loyalty, lower customer acquisition costs (CAC) and higher conversion rates, which “which allows the company to grow above its peers and maintain adequate profitability even in adverse economic environments.”
The report also states that “Financial services will continue to ensure solid growth rates in the coming years, as MELI expands its financial and credit origination services in Brazil and Mexico.” The low penetration of digital payments in the region and the existence of a large unbanked population “offer great opportunities for growth in the coming years.”
Source: Ambito
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