MercadoLibre's Free Shipping Bet Keeps Brazil's Growth Accelerating

MercadoLibre, Inc.’s MELI decision to lower its free-shipping threshold in Brazil continues to yield meaningful operational benefits, driving sustained momentum across its marketplace. One year after the change, the initiative has produced a durable shift in buyer engagement, increasing conversion, purchase frequency and cross-category shopping, while unit economics continue to improve.

The company reported that items sold in Brazil rose 56% year over year in the second quarter of 2026 compared with 26% growth a year earlier, while FX-neutral GMV increased 39%.  MercadoLibre also added nearly 19 million unique active buyers globally, with fastest growth in Brazil, where management highlighted the compounding impact of the lower threshold.

Rather than providing a temporary boost, the reduced threshold triggered a lasting step-change in conversion rates, which expanded by 1.1 percentage points year over year during the quarter. Daily active users have also continued to grow faster than monthly active users in every quarter since MercadoLibre lowered its free-shipping threshold in June 2025. Items sold per unique active buyer in Brazil climbed 19% year over year, leading the company's overall consolidated 14% increase. 

The share of Brazilian buyers purchasing across three or more categories monthly expanded by 10 percentage points over the past year. Newer buyer cohorts are also purchasing more items across more categories and showing higher retention than earlier cohorts. Ecosystemic user growth in Brazil accelerated to almost 50% year over year in the quarter, up from 35% before the shipping-threshold change.

MercadoLibre said that free and slow shipments are now variable contribution-positive across half of the average selling price ranges between R$19 and R$79, as scale, technology and unused logistics capacity reduce costs. MercadoLibre still faced higher shipping costs in the quarter, some of which it absorbed, but the evidence so far suggests the free-shipping move has moved beyond a short-lived promotional lift and is supporting more frequent, broader shopping behavior in Brazil.

How Does MercadoLibre Stack Up Against Its Industry?

MercadoLibre, which competes with Amazon.com, Inc. AMZN and Sea Limited SE, has seen its shares gain 13.6% over the past three months compared with the industry’s 3.1% rise. While Amazon shares have climbed 2%, Sea Limited has rallied 25.4% in the aforementioned period.
 

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What Does MercadoLibre's Current Valuation Suggest?

From a valuation standpoint, MercadoLibre's forward 12-month price-to-earnings (P/E) ratio is 39.02, higher than the industry average of 22.13. The stock is also trading above its 12-month median level of 34.46.

MercadoLibre is trading at a premium to Amazon (forward 12-month P/E of 23.35) and Sea Limited (24.46).
 

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What Do Earnings Estimates Signal for MercadoLibre?

The Zacks Consensus Estimate for MercadoLibre’s current financial-year sales implies year-over-year growth of 44.6%, while the consensus estimate for earnings per share suggests a decline of 0.7%. For the next fiscal year, the consensus estimate indicates a 28.9% rise in sales and 43.3% growth in earnings.

Over the past 30 days, the Zacks Consensus Estimate for earnings per share has declined by $1.89 to $39.11 for the current fiscal year and by $3.13 to $56.05 for the next fiscal year.
 

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MELI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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