Days ago, Mercado Libre went to search for funds on Wall Street and the offers were six times higher than what it was aimed at. From technological giants such as PayPal, to small investors, all have wanted to get on the train of success of the great unicorn of the region.Specifically, the company announced its intention to obtain 1,850 million dollars, of which: u $ s 1,150 million would come from a public offer, u $ s 750 million from a strategic contribution of PayPal and another u $ s 100 million from the disbursement of a firm affiliated with the Dragoneer Investment Group capital fund.
"We successfully placed more than US $ 1 billion in the Nasdaq and adding the Paypal investment, a total of US $ 2 billion." Pride for Mercado Libre and Mercado Pago, a milestone for the region and the sector. continue to democratize trade and money, "celebrated its CEO and alma mater, Marcos Galperín, from his Twitter account.
Just as it aroused the interest of the great players of Wall Street, more and more Argentines are wondering how to get on the Mercado Libre stock exchange and other prestigious firms without having to spend large sums of money.
In addition, many want to know if it is too late to enter or the action, which currently approaches $ 489, still has a high potential to rise.
To begin, it must be clarified that although Mercado Libre is listed in New York (under the MELI name), it is also listed on the local Stock Exchange under the form of Cedear (see table below)Through a local stock exchange company you can:
- Buy Cedears
- Acquire company shares on Wall Street
1.- Buy Cedears: although they are quoted in pesos, they replicate both the movement of the US stock. like the dollar in the City. For example, if one day the variation of the stock was zero and the exchange rate rose 1% against the peso, the Cedear de MELI also increases 1%.
Another advantage (for many the main one) is that the investor does not pay Income Tax for the profitability associated with the variation of the security, since it is under the purview of the National Securities Commission (CNV). This is what the new law of this tax establishes, which refers both to the Cedear and to securities and shares that operate in the Buenos Aires Stock Exchange.On the other hand, one of the great cons of this instrument is that it operates in a liquid market, which means that it is not so easy to find a counterpart when you want to sell a paper, which ultimately translates into a higher cost. "They are for a very select public, they do not have much volume and the cost of entry and exit is very high," warns Pablo Castagna, director of Portfolio Personal Inversiones (PPI), to iProUP.
2.- Buy shares outside: the other way to get on the Mercado Libre train is to directly acquire an Argentinean listed stock in Argentina. Although it is reached by Profits, it has sufficient liquidity so that the cost of entering and leaving is minimal.
Then, to acquire in Argentina shares of companies that operate in New York, a broker must be found that has agreements with foreign agents to open an account in the United States. In practice, some open an account to the client outside the country and others directly operate with that of these external agents.
However, the client has those actions in his local account.It's a good moment?
"Clearly, Mercado Libre has very high growth prospects, huge potential and multiple opportunities that vary over time," says Nicolás Capela, stock analyst in Investing in the Stock Market.
"At the beginning, it was just a retail company and now it has the Mercado Pago area, which is gaining more and more participation, in addition to the financial business of investing customers' idle money in Mercado Pago funds", he adds in a dialogue with iProUP.In the same vein, the financial adviser Andrés Cardenal highlights that for Mercado Libre today, the digital transaction system of Mercado Pago is as valuable as online commerce.
"Almost what is happening in digital payments is a more important driver for the action than what happens in online commerce," the analyst tells iProUP. And he adds: "The growth of MP is much faster."
According to the last balance presented, the total volume that Mercado Pago added in the fourth quarter was US $ 5,300 million, an increase of almost 70%. On the other hand, the total volume contributed by the e-commerce business increased 17%.
The promising future of the company is another factor that explains the strong interest it generates among investors.
"Both Mercado Libre and the sector in general have enormous growth potential, and even in the largest countries, such as the US and China, there is an entire penetration of ecommerce, which leaves room for growth. And not to mention Brazil or Latin America, with much less participation, where Mercado Libre operates, "says Capela to iProUP.Some numbers of e-commerce and Internet traffic worldwide show that:
- In the United States, the percentage of Internet users reaches 83% of the population
- In Argentina, 68%
- In Brazil, at 57.7%
-In Mexico, at 57%
With regard to the number of online shoppers:
- In the US, 66% of the population uses ecommerce
- In Argentina, 43.3%
- In Brazil, 37.6%
-In Mexico, 29.6%
-In China, 62.7%
Another fact that helps to understand the potential for growth -and more with the focus on its Mercado Pago business unit- is the low level of bancarization in Argentina, which barely reaches 50% of the population."This is a model that worked a lot in China, there are many people who do not even enter the formal banking system but who start to enter into digital payment models, such as Mercado Pago," explains Cardinal.
According to the numbers of the fourth quarter, 62% of the unicorn's income came from Brazil, 21.2% from Argentina, 10.6% from Mexico and the remaining 6.1% from other countries. "For the company, the big market to capture, the big carrot, is Brazil," reasons Cardinal.
The bad side, he adds, is global competition. "In Brazil, where MELI wants to gain a lot of ground, Amazon is starting to get in. There will be a margin competition in a fight between a giant, like the one led by Jeff Bezos, and MELI, commanded by Galperín, which is big it is not as much as the first ", highlights the investing in stock market analyst.
Strictly speaking, after the last capital injection, Mercado Libre reached a market value of more than US $ 20,000 million, which is equivalent to more than the seven Argentine companies that follow it in valuation.
In any case, it competes with giants such as Alibaba, which is worth about US $ 466 million, and Amazon, with a market valuation of over US $ 800 million.
"Also the turnover of its competition is much bigger: the Free Market was $ 1.4 billion last year, while the Alibaba climbed to $ 345,000 million and the Amazon, to $ s233,000 million" , compare Cardinal.Step by step and commissionsBoth to buy Cedear and to acquire an MELI share on Wall Street, the following steps have to be taken, with some fixed costs and others that depend on the operation:
- Open an account in a local Stock Exchange (can be done from the Internet and its opening and maintenance usually have no cost)
- For each purchase or sale of an action (both for Cedear and for securities on Wall Street) you have to pay a commission of between 0.4% and 0.8%
- You also have to pay the market right -which is 0.08% of the operation- that goes directly to the BYMA (Argentine Markets and Markets)
- VAT must be added to the mentioned items
- Both the Cedear and the titles are covered by the Personal Property Tax
In the case of most local agents, you must add some expenses associated with the account abroad:
- There is a fixed rate per operation. As the local broker has to fund the account in the United States (take the dollars abroad), they usually do so with the operation known as "contado con liqui", with which they buy assets in the local market and sell them in New York , so that the operation in the external account is accredited.
- In addition, normally, there is an administrative cost of the broker from abroad, which ranges between US $ 10 and US $ 12. "For this reason, if one is going to operate outside the country, it is recommended that it be a volume that justifies the fixed administrative cost," explains an experienced operator of the City.
- With the shares in the US, as explained above, Tax is paid for the difference between buying and selling the share. For example, if he acquired it at US $ 100 and assigned it to US $ 130, he pays 15% on the US $ 30 obtained from profitability.International context
Brazil, a country where MELI has a large part of its business and Amazon is preparing to enter, is a very large market and there is room for both.
"The global status of this sector marks that each company has a niche: Amazon is power in North America, Mercado Libre should stay with Latin America and Asia should be Alibaba, so it is distributed today," says Capela, adding: "I do not know which is going to be the big winner in the region. "Anyway, for the investor who wants to bet on the sector in general, you can also choose titles from Amazon, Alibaba, or eBay, although the latter has less potential, according to specialists consulted by iProUP.
Castagna emphasizes that in Portfolio Personal Inversiones they look with good eyes to the whole segment in general.
"What we have registered in recent years is where the world is going and it is a sector with companies that adapt quickly to economic circumstances, to what consumers ask for and gain value," explains the director of PPI to iProUP.
"Clearly, it is the area where a part of the position of an investor in equities has to be," he adds.
"We always recommend that you buy shares that have an investment horizon of at least two years," Castagna warns.
Cardinal agrees on this point and adds: "If you want to buy the title as a long-term investment, it's fine, because the numbers are very good, there's no reason not to do it."
In summary, even quoting at maximum levels, the company has a lot to grow, with a huge market to explore. The costs to invest in their actions are not so high, and the projections are more than positive.
You just have to know that when investing in this type of assets you will find yourself with volatility, possible losses and rises, often motivated by external factors. The key is to bet on the medium or long term.