Michael Burry Backs MercadoLibre: Contrarian Call or Blind Spot?

Key Points

• The famed Big Short investor believes the recent sell-off is an error.

• His long position is linked to his short bets on AI stocks.

• MercadoLibre’s profits dipped as it reinvested for expansion.

Michael Burry remains one of the most closely watched investors in the market. The former head of Scion Asset Management achieved renown through The Big Short for profiting from the 2008 housing collapse. That success cemented his reputation as a leading contrarian, and market participants have tracked his portfolio decisions ever since. Following his decision to close his hedge fund last year, Burry now communicates his views and positions via a Substack newsletter. A standout thesis for the year has been MercadoLibre (NASDAQ:MELI). Shares have retreated nearly a third from their 2025 peak, even as technology stocks and the S&P 500 remain near record highs.

MercadoLibre, the leading e-commerce entity in Latin America, has been a standout performer since its 2007 IPO but has faced recent challenges stemming from competitive pressures, shrinking margins, and risks associated with its credit offerings. The stock received a boost Monday, climbing 9.7% as Brazilian equities rallied on Flavio Bolsonaro’s strong election showing, given his reputation as a pro-business candidate. Nevertheless, Burry has been building his case for months.

Image source: MercadoLibre.

Why Burry is Bullish on MercadoLibre

Burry has also drawn scrutiny for short positions against Nvidia and Palantir, which inform his MercadoLibre thesis. He argues that capital has overcrowded into popular AI stocks, leaving robust companies like MercadoLibre trading at bargain valuations. He drew a parallel to 1999, when the technology mania left quality names in other sectors undervalued.

The contrarian also noted that management’s long-term strategy of investing in logistics, lowering free shipping thresholds, and expanding credit is sound. He cites MercadoLibre’s strong top-line growth as evidence that these initiatives are yielding results.

MercadoLibre’s Unbeatable Track Record

It is understandable that MercadoLibre’s margins have faced pressure, as rivals like Amazon and Sea Limited have intensified their market investments. However, one metric highlights the company’s dominance and growth capacity.

MercadoLibre recently became the first major enterprise to record 30% revenue growth for 30 consecutive quarters, a feat unmatched by any other large public company. The streak was driven by e-commerce expansion across Latin America, logistics infrastructure investment, and the scaling of its MercadoPago fintech arm in Brazil and Mexico. This growth history reflects management’s execution, the regional opportunity, and the potential within new ventures such as credit.

Is MercadoLibre a Buy?

The recent decline suggests some investors fear long-term margin impairment or share loss to competitors. However, I concur with Burry that the investments are driving growth, and assuming the business is in distress is an error. Revenue surged 50%, or 43% on a currency-neutral basis, to $10.2 billion in the second quarter, supported by fintech and e-commerce growth.

Key metrics, including assets under management per user and items sold per buyer, are rising, indicating expanding scale. Analysts also forecast a return to earnings growth next year, expecting EPS to climb nearly 50% to $55.95, implying the stock trades around 33 times forward earnings. That valuation appears attractive for a company with MercadoLibre’s growth pedigree. The stock continues to look like a strong buy.

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