Latin American e-commerce giant MercadoLibre's losses widened in the first quarter of this year

In the first quarter of 2021, MercadoLibre reported a net loss of $36 million, 61% higher than the $21.1 million it reported in the same period last year.

MercadoLibre's gross margin fell to 42.9% in the quarter ended March 31, from 48% a year earlier. The company's net loss widened 61% from a year earlier to $34 million.

Despite the increase in losses, its first-quarter revenue more than doubled to $1.4 billion. That beat the $1.14 billion estimate from Refinitiv IBES. In fact, last year its global turnover was $3.9735 billion, up 73% from 2019.

The company's first-quarter loss was hit hard by lower profit margins and was also related to its increased spending to cope with a surge in online shopping and digital payments in Latin America.

MercadoLibre has been battling rivals including Amazon in a growing Latin American market where many shoppers are still uncomfortable spending money online, so the company has been increasing investments in key areas such as warehouses and financial technology services.

For example, in Brazil, which has been hit by a second wave of the COVID-19 pandemic (accounting for 56% of MercadoLibre's total revenue), online shopping and digital payments continue to grow in the region and in neighboring countries including Argentina.

Its financial company arm Mercado Pago saw total payment volume rise 81.8% to $14.7 billion as the company upgraded its digital payment engine during the pandemic, with many stores moving online. The company also has a strong presence in the vast e-commerce market in Latin America.

Latin American e-commerce giant MercadoLibre has been one of the winners of the e-commerce boom during the coronavirus pandemic. Over the past year, it has cemented its position as the most valuable Argentinian company on the planet, a title it reaffirmed in late January when its market value surpassed $100 billion.

Despite MercadoLibre's growing losses, its online retail customer base grew 62% to 69.8 million, and its number of items sold grew 110.2%. And from a development perspective, increased spending to cope with growing online demand will help it expand further in Latin America.

Online Shopping

E-commerce

Latin America