Why MercadoLibre Stock Dropped Today
Shares of MercadoLibre (NASDAQ: MELI), the Latin American e-commerce giant, tumbled 4.4% through 10:15 a.m. ET on Thursday after investment bank Citigroup cut its price target on the shares by 23%, to $1,150.
Citi cited MercadoLibre's plans to keep growing its proprietary credit cards business as the reason for the price target cut, reports The Fly.
MercadoLibre has always been more of an e-commerce marketplace than a credit card provider. Last year, commerce revenue surpassed $4.6 billion, while fintech revenue was only $2.4 billion, for example, according to the company's 10-K filing with the Securities and Exchange Commission (SEC). But as fintech -- and credit cards in particular -- grow to make up a larger proportion of the company's business, Citi worries that loan losses on those cards will also grow, potentially hurting profit margins for MercadoLibre as a whole.
Source Fool.com
