What Happened?
Shares of latin American e-commerce and fintech company MercadoLibre (NASDAQ: MELI) fell 5.5% in the morning session after the stock's negative momentum continued as Citigroup lowered its price target on the stock to $2,700 from $2,850.
The firm, however, maintained its "Buy" rating on the shares. The adjustment from analyst Joao Pedro Soares reflected a 5.26% decrease in the price target. While a "Buy" rating indicates a positive long-term view, a reduced price target can cause investor concern about a stock's near-term potential. This action suggested that even with a continued positive outlook, the analyst saw slightly less upside in the stock's value compared to the previous forecast, prompting a negative reaction in the market.
Adding to the weakness, markets pulled back as worries over worsening trade relations with China were triggered by critical comments from President Donald Trump. Trump targeted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. The president's tone and the suggestion of canceling a meeting with President Xi caused a rapid sell-off in the market.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy MercadoLibre? Access our full analysis report here.
What Is The Market Telling Us
MercadoLibre’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 2.9% as concerns grew over heightened competition in Brazil, its largest market. The concerns followed Amazon's announcement of an aggressive expansion in the country, where it waived fulfillment fees and take rates for new merchants through the holiday season. This move was seen as a direct challenge to MercadoLibre's position. Adding to the competitive pressure, reports indicated that companies like Temu and Shein were also gaining ground by offering ultra-cheap goods in the region. Reflecting these worries, JP Morgan lowered its price target on the stock to $2,600 from a previous $2,700, signaling a more cautious outlook from the analyst.
MercadoLibre is up 20.9% since the beginning of the year, but at $2,135 per share, it is still trading 18.3% below its 52-week high of $2,614 from June 2025. Investors who bought $1,000 worth of MercadoLibre’s shares 5 years ago would now be looking at an investment worth $1,756.
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