By Brazil Stock Guide – JPMorgan cut its price target for Mercado Livre (NASDAQ: MELI; BDR: MELI34) to $2,600 from $2,700 after shares fell nearly 12% this week, citing mounting competitive pressures in Brazilian e-commerce and rising reinvestment needs.
The bank kept a neutral recommendation, but warned that consensus estimates—such as Bloomberg’s projection of a 100 to 130 basis-point margin expansion—do not reflect the additional cost burden. JPMorgan expects third-quarter EBIT of $750 million, below consensus of $811 million, pressured by logistics costs and the weakness of the Argentine peso.
JPMorgan highlighted Amazon’s (NASDAQ: AMZN) recent promotion waiving Fulfillment by Amazon (FBA) fees for three months, Shopee’s aggressive expansion backed by Sea Ltd (NYSE: SE), and Mercado Livre’s own defensive pricing moves. Together, these factors are expected to squeeze margins and force higher spending in the years ahead.
Morgan Stanley, however, downplayed the risk, arguing that Amazon’s promotions are unlikely to alter the balance of power given Mercado Livre’s dominant scale and continued shipping subsidies. Amazon is estimated to hold around 10% of Brazil’s e-commerce market, compared with roughly 40% for Mercado Livre.
Amazon operates 10 fulfillment centers in Brazil, while Mercado Livre has more than 20 and has achieved over 60% fulfillment penetration. Mercado Livre has also waived logistics fees for products priced between R$19 and R$79, consolidating its advantage.
Despite JPMorgan’s caution, Morgan Stanley reiterated an overweight rating and a price target of $2,850 for Mercado Livre, pointing to its strong logistics network and fulfillment base as key pillars of resilience.
Read more: Amazon joins Brazil’s e-commerce war