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Wrapping up Q3 earnings, we look at the numbers and key takeaways for the online marketplace stocks, including MercadoLibre (NASDAQ:MELI) and its peers.
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
The 13 online marketplace stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was in line.
Luckily, online marketplace stocks have performed well with share prices up 37.7% on average since the latest earnings results.
Weakest Q3: MercadoLibre (NASDAQ:MELI)
Originally started as an online auction platform, MercadoLibre (NASDAQ:MELI) is a one-stop e-commerce marketplace and fintech platform in Latin America.
MercadoLibre reported revenues of $5.31 billion, up 35.3% year on year. This print exceeded analysts’ expectations by 2.5%. Despite the top-line beat, it was still a mixed quarter for the company. MercadoLibre reported impressive revenue growth. On the other hand, its EBITDA and EPS missed because it ramped up investments in its credit and logistics businesses. Specifically, its higher loan originations in the quarter led to the recognition of bad debt upfront (the expected losses on the loans). The new loan originations came from credit cards and moving up-market to higher-quality customers - these new accounts have lower default risk (credit cards have shorter duration), so they come with lower yields that result in a lower blended NIMAL spread (aka margins).
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $2,123.
Is now the time to buy MercadoLibre? Access our full analysis of the earnings results here, it’s free.
Best Q3: Shutterstock (NYSE:SSTK)
Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE:SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.
Shutterstock reported revenues of $250.6 million, up 7.4% year on year, outperforming analysts’ expectations by 5.1%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ number of paid downloads estimates.