A 13% drop left MercadoLibre above the $1,433 Michael Burry says it is worth
Burry set his floor at $1,433 and said he had been waiting below $1,500; the stock touched $1,470 on November 5 and bounced. His case is a logistics build and a data-gated credit book, against a market that sold the same earnings call 13% lower.
Richard Tang · 4 min read
Michael Burry named his price for MercadoLibre+0.96% — MercadoLibre, up 0.96 percent today this morning, and the market came close, then bounced away. Burry, who shorted subprime mortgages before the 2008 crisis and now publishes the Cassandra Unchained letter after shutting his Scion fund, said the Latin American e-commerce and fintech company's quarter "does not concern me": he put his adjusted intrinsic value at $1,433 and said he had been waiting for the stock below $1,500 1.
On November 5 it fell 13%, touching $1,470, while the S&P 500 dropped almost 4% on fears of a slower AI build-out 2. He has bought the stock several times this year as the other leg of short bets against Nvidia+4.46% — Nvidia, up 4.46 percent today and Palantir+2.72% — Palantir, up 2.72 percent today 3. His argument is that investors crowded into AI chip and infrastructure stocks, leaving profitable companies that apply AI, like MercadoLibre, cheap by comparison, a setup he compares to 1999 3.
The margin miss is capacity bought before the volume
On the November 4 earnings call, chief financial officer Martín de los Santos put the operating margin at 6.3% and decompressed the fall 4. Shipping cost about 60 basis points of margin 4. The biggest piece was fulfillment space that grew almost 20% quarter-on-quarter ahead of peak season; in his words, "that cost lands before the volume does" 4. Marketing added a step-up in Brazil affiliate spend, with the line still inside its historical range 4. Revenue grew 41% on a currency-neutral basis 4. Net income of $448 million still missed Wall Street's estimates 5.
That is the whole disagreement. Investors sold as if the margin fall were permanent, while the call attributed it to capacity and affiliate spend deliberately timed ahead of the peak season, with part of the shipping cost expected back in the fourth quarter 4.
MercadoLibre's operating margin has halved in two years
Operating margin halved as revenue growth accelerated toward 50%
Data
| Operating margin | |
|---|---|
| Q1 '24 | 12.2% |
| Q2 '24 | 14.3% |
| Q3 '24 | 10.5% |
| Q4 '24 | 13.5% |
| Q1 '25 | 12.9% |
| Q2 '25 | 12.2% |
| Q3 '25 | 9.8% |
| Q4 '25 | 10.1% |
| Q1 '26 | 6.9% |
| Q2 '26 | 6.7% |
| Q3 '26 | 6.3% |
The credit book is the bear case, stated honestly
Fintech president Osvaldo Giménez put Brazil's 15-to-90-day non-performing loans at 7%, stable against the prior quarter and the prior year 4. The portfolio behind that ratio is growing 62% 4. The moat he described is a data loop: the marketplace shows how people buy and repay before MercadoLibre lends, so underwriting quality comes from behavior the company already owns 4.
The stable 7% is the observation 1. A Brazilian credit downturn reaching a book growing this fast is the projection, and Burry's "eyes wide open" is the condition on it: his thesis holds only if that ratio survives the growth, and he is accepting that risk knowingly 1.
Applied AI is the leg the selloff ignored
The same call carried the quiet case for Burry's pairing. AI investment rose $30 million in the quarter, and in product search the model costs are "more than compensated by the incremental revenues" 4.
The fintech agent Mago held 19 million conversations in September 4. An AI advertising manager now runs campaigns for 56,000 sellers, and chief executive Ariel Szarfsztejn has refused to hand inventory to outside shopping agents, building MercadoLibre's own agent on its first-party data instead 4. That is AI paid for out of operating margin rather than capital spending, the inverse of the build-out the market spent November 5 fleeing 2.
Coupang got paid for calling a bottom; MercadoLibre named none
Coupang0.00% — Coupang, unchanged today, the Korean e-commerce company, rose 12% on November 4 on a quarter hurt by a fire at a fulfillment center and a retail margin still paying for last year's data incident 6. Management called the low, promising pre-incident margins back by mid-2027 6. MercadoLibre named its costs, named no bottom, and was sold.
By early afternoon the stock traded at $1,508.90, still down 13.28% 2. That is back above the $1,500 line Burry had waited under: his fill has not printed, and the $75 between $1,509 and $1,433 is now the live question, against a street whose lowest target is $1,750 2. The tests are dated: part of the shipping cost is due back in the fourth quarter 4, and the 7% has to hold if Brazil's credit cycle turns 4.
The bounce left $75 above Burry's floor and $241 below the street's lowest target
Data
| Value | |
|---|---|
| Burry's floor | $1,433 |
| Nov 5 touch | $1,470 |
| Burry's wait line | $1,500 |
| Traded early afternoon | $1,508.90 |
| Lowest street target | $1,750 |
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