MercadoLibre, Inc. (Nasdaq: MELI) closed at $1,839.11 on October 14, 2026, about 8% above the $1,696.56 close in place when Deep Sail Capital (@DeepSailCapital) called the stock "Very bullish" on October 5. His case rests on Brazil's election, a stock he saw at a technical bottom, and profits that inflect once growth in its $16 billion credit book slows. Brazil's presidential runoff is on October 25, 2026.
This is journalism and commentary, not investment advice. We hold no position unless stated.
Key facts
- Ticker and exchange: MercadoLibre, Inc., MELI, Nasdaq.
- Situation type: Latin America's leading e-commerce and fintech company, per its own description, trading on a Brazil election swing and a debate over credit costs.
- The call: Deep Sail Capital's October 5, 2026 post, "Very bullish: Economic Backdrop, Business Results forward, and technicals." We log it as a long.
- Second quarter 2026: Net revenues and financial income of $10,169 million, up 50% year over year, while income from operations fell 17% to $683 million, a 6.7% margin.
- Credit book: The credit portfolio passed $16 billion, up 75% year over year, with a 15-90 day non-performing loan rate of 7.0%.
- Catalyst: Brazil's October 25, 2026 runoff between Flavio Bolsonaro and President Luiz Inacio Lula da Silva, then third-quarter results.
- Main risk: Fast loan growth can hide weak underwriting until losses show up.
Is MELI a good bet right now?
The bull case is that investors are paying for today's credit costs but not yet for the profit those loans may earn later.
Revenue is growing fast, but margins are thin because MercadoLibre books provisions as it lends. Net income fell 11% to $466 million in the second quarter even as revenue rose 50%. If loan growth cools, those upfront costs should shrink relative to income.
The price has already moved. MELI jumped to $1,860.61 on October 5, about 9.7% above the prior close. Even so, it sits about 20% below its 2026 closing high of $2,295.00 on January 27.
Why are investors bullish on MercadoLibre?
- Election swing. CNBC reported that Flavio Bolsonaro took more than 47% of first-round votes. The iShares MSCI Brazil ETF rose more than 12% on October 5.
- Revenue growth. Second-quarter revenue growth of 50% was the fastest pace in four years, the company said.
- Asset quality. The 15-90 day non-performing loan rate was 7.0% overall and 4.6% for credit cards, both near historic lows, according to the company.
- Cash generation. Adjusted free cash flow was $214 million after about $2.1 billion invested in growing the credit portfolio.
- Accounting argument. Bulls say US accounting rules make a fast-growing lender look worse, because expected lifetime losses are booked upfront.
Who's making this call and why?
Deep Sail Capital describes itself as a long/short growth-at-a-reasonable-price fund with about 57,000 X followers. His October 5 post opened "$MELI - Excellent Brazil outcome." He wrote that results "will begin inflecting as the credit portfolio growth slows."
Track record. In our tracking, Deep Sail Capital is 13-12 (a .520 win rate) on 25 calls scored at 180 days against the S&P 500, with an average edge of +8.94 percentage points and a median of +3.19, ranking 5th on the career table. His earlier MELI long, logged from a March 27, 2026 post calling the stock historically cheap, trailed the index by 8.66 points at 180 days. See the scoreboard.
Supporters:
- Fede Sandler (@FedexSTi), a former MercadoLibre investor relations officer, so not a neutral voice, argued that side-by-side margin comparisons "understates $MELI's credit economics when it's growing the book faster."
- @RomeoLivermore, a self-described trader, wrote: "Normalized EPS ~$50, not $37." That figure is his own estimate, not company guidance.
Who disagrees?
- The cohort skeptic. Northwise Project (@InvestNorthwise) wrote that the new-customer cost story "is also a very convenient explanation for losses, which is why it needs a clock attached." Its own model has direct credit card contribution still negative in 2028.
- Margin compression. Net interest margin after losses fell 2 points from a year earlier to 20.7%, as lower-spread credit cards rose to 47% of the portfolio.
- Election risk. A Lula win on October 25 could unwind much of the October 5 rally.
- His own record on the name. Deep Sail's last MELI long lagged the S&P 500.
What are the key facts to verify?
- MercadoLibre's second-quarter 2026 results: revenue, margins, credit portfolio, NPL rates and free cash flow.
- The October 25, 2026 runoff result and how Brazilian assets react.
- Third-quarter credit portfolio growth. The bull case needs it to slow from 75%.
- Whether provisions fall as a share of revenue.
What would prove it right or wrong?
Signals the long is working:
- Credit portfolio growth slows while non-performing loan rates stay near 7.0%.
- Operating margin climbs back above the second quarter's 6.7%.
- The runoff result keeps Brazilian markets stable.
Signals it is failing:
- Loan losses rise as younger card customers age.
- Margins stay compressed even as loan growth slows.
- The election rally reverses after October 25.
This is journalism and commentary, not investment advice. We hold no position unless stated.