MercadoLibre and SoFi: Growing Fast, Yet the Stocks Fell

Growing Fast but the Stock Fell — Broken, or on Sale?

A stock falling more than 35% doesn't mean the company is broken. In fact, the zone where fundamentals keep improving while the price drops hard is exactly the hunting ground where I go looking for value.

Today's two names — MercadoLibre (MELI) and SoFi — are precisely that case. Both are growing at an insane pace, and both have seen their stocks sink. Let me walk through why that happens and why it might be an opportunity.

1. MercadoLibre — the ‘Amazon of Latin America’ Also Building a Bank

I call MercadoLibre the ‘Amazon of Latin America,’ but more precisely it's building that Amazon while simultaneously building the region's leading fintech and bank.

The stock has fallen more than 35% from its high, and many people assume something broke. But look at what the business actually did last quarter:

• Revenue growth of 49% year over year
• Commerce (shopping) up 47%
• Payments up 51%
• Items sold in Brazil alone up 56%
• Lending up 87%

Those are not the numbers of a broken company. The real reason the stock fell is that margins got thinner — and management says that was on purpose. Instead of squeezing out pennies to please Wall Street this quarter, they're pouring money into free shipping, warehouses, credit cards, and marketing.

From my perspective, this isn't a tired old store trying to save money. It's a company still being built in a part of the world where online shopping, payments, and banking are years behind the United States.

2. SoFi — Your Whole Financial Life in One App

SoFi wants to hold your entire financial life — loans, banking, investing, even crypto (I remain skeptical of crypto personally) — in a single app. And the growth is hard to ignore.

• Revenue up 41% year over year
• Its profit measure up 62%
• Members up 35%, to 14.7 million
• Loans up 68%

Yet the stock sold off. The reason was that management repeated its old forecast instead of raising it, and hopes for interest-rate cuts faded at the same time.

But there's a signal many people caught — CEO Anthony Noto bought $2 million of stock with his own personal money in the open market. When the person running the company buys that much, you don't have to take his word for it, but you do have to pay attention.

The Signal These Two Share

Two things tie these companies together.

First, management is deliberately sacrificing short-term profit. MercadoLibre is investing in logistics and credit; SoFi in members and loans. That can be an expression of confidence.

Second, insider and management behavior. The SoFi CEO's stock purchase is a strong signal. In cases like these I always ask myself one thing — is the market scared because the business is being damaged, or because it's disappointed by short-term results? If it's the latter, that's the opportunity.

Side by Side

Metric	MercadoLibre	SoFi
Identity	Amazon of Latin America + fintech/bank	All-in-one financial app
Revenue growth (YoY)	49%	41%
Key growth metric	Payments +51%, lending +87%	Loans +68%, members +35%
Why the stock fell	Thinner margins (deliberate investment)	Guidance held + fading rate hopes
Signal to note	Brazil unit sales +56%	CEO's $2M stock purchase

FAQ

Q: Is any growth stock that's fallen automatically an opportunity? A: No. The key is whether the fundamentals are still improving. If revenue, users, and loans are growing double-digits while only the price fell, it's worth a look; if the business metrics themselves rolled over, it could be a value trap.

Q: Margins shrank — why view that positively? A: The question is whether the margin compression happened by necessity or by choice for growth investment. MercadoLibre said it's the latter, and if the lending and logistics spend returns as future revenue, today's thin margin isn't the problem.

Q: How much should I trust a CEO buying his own stock? A: It's not a signal to worship, but not one to ignore either. The person who knows the company best putting in personal money is at least a reason to dig into ‘why now?’

This is meant to share an analysis process, not a buy or sell recommendation on any specific stock. For the same process applied in detail to Uber, see my Uber valuation piece.