Broader equities have shown resilience this year, navigating the volatility sparked by President Donald Trump’s assertive trade policies. Notable among high performers are MercadoLibre and Netflix, which have both achieved impressive stock gains of 34% and 35% respectively.
Despite their robust performances thus far, analysts believe both companies still harbor significant growth potential for long-term investors.
MercadoLibre stands out as the leading e-commerce platform across Latin America. One contributing factor to its strong stock performance this year is its relative insulation from U.S. tariffs, allowing it to maintain a steady path amid fluctuating market conditions. In its recent financial report for the second quarter, MercadoLibre disclosed a remarkable 34% increase in revenue year-over-year, reaching $6.8 billion. Though net income saw a slight decrease of 1.5%, attributed to currency volatility and a higher tax rate, analysts suggest these issues are not expected to persist.
MercadoLibre has established a complex ecosystem that has seen consistent growth, marked by an increasing user base and a rise in total payment volume for its fintech segment. This multifaceted approach, encompassing e-commerce, fintech, and logistics, creates a formidable competitive advantage. The company’s significant investments in logistics and fulfillment across diverse South American countries, some of which face political instability, bolster its market position, making it difficult for competitors, including Amazon, to replicate its success.
Looking ahead, even with escalating competition, including players like Sea Limited’s Shopee, MercadoLibre appears poised to maintain its leadership in the burgeoning e-commerce and fintech sectors. While the stock’s momentum may vary in the short term, analysts foresee its potential for market-beating returns over the next decade.
Netflix, on the other hand, enjoys a business model primarily insulated from trade tariffs. As a subscription-based streaming service, its revenue streams are not reliant on imported goods—a significant advantage in the current economic climate. The shift away from traditional cable television has bolstered Netflix’s long-standing position in the streaming arena, further amplified by its brand power that allows for price increases without drastically affecting subscriber retention.
In its latest earnings report, Netflix reported a 15.9% rise in revenue year-over-year, totaling $11.1 billion. Its earnings per share saw an impressive growth of 47.3% to $7.19, alongside a surge in free cash flow, which increased by 86.9% compared to the previous year, reaching $2.3 billion.
The company’s content strategy plays a crucial role in its success. By leveraging a vast audience and viewing data, Netflix continually improves its offerings to attract new subscribers. Although it controls less than 10% of viewing time across its markets, this substantial figure indicates that there is still significant room for growth.
Netflix’s nascent advertising business, although not yet revealing exact figures, is projected to yield around $1.3 billion in revenue by 2024, lending credence to its capacity for expansion. Given its impressive year-to-date performance, the stock remains seen as a promising investment with ample opportunities for continued growth.
Investors eyeing these two companies may find that both MercadoLibre and Netflix hold the potential for not only substantial returns but also resilience against broader market fluctuations.
