Alibaba, the biggest e-commerce company in China, generated about US$110bn revenue in 2020. Given that China is the biggest consumer market in many items and a unified market, it is unlikely that MELI can achieve US$100bn revenue? If that being the case, what do you think is the more achievable revenue target? What about valuation? Both Amazon and Alibaba are trading at 4-5x P/S now, SEA are Shopify are much higher but are they sustainable? Thanks!
Good point. I think it's somewhat unfair to compare Alibaba and Meli as they operate with a very different customer base, have distinctly different core operations and are vastly different in scale - however Meli has potential to really expand revenue in several important ways.
1) and probably the most exciting aspect is the payments (pago) which has the ability to boost revenues substantially. Compared to Square (who currently generate about $10B) there is plently of room to grow.
2) the e-commerce aspect is seemingly just taking off as people are getting used to purchasing goods online.
As an estimate, I could see Meli increasing overall revenue to somewhere between $10B-$20B within 3-5 years based on these high growth areas. Nowhere near Alibaba, though China's GDP is roughly 3X the size of Latin America.
As for valuation, you're correct, valuations are relatively stretched for both SEA, Shopify and somewhat Meli. There is a risk of contracting valuations over the coming years, however Meli are still firmly in their growth stage, so it's difficult to give any specific answer on this one.
Lots of good points - you are comparing Latin America to USA and while it is true that the population of the former is roughly double that of the latter, it is worth pointing out that the US economy is currently roughly 5 times larger; US gdp ~21 trillion vs Brazil+Mexico+Argentina+Columbia+Chile ~4.1 trillion.
Yes, that is an incredibly important distinction to bring up, thanks.
I think you are correct, you would be taking a bet on the continued GDP growth in Latin America over a long period of time - but I also see it as an opportunity. I can see that gap between the US and LatAm closing somewhat over the next 10 years, but it will undoubtedly take a long time before the economy grows to similar levels of the U.S.
Alibaba, the biggest e-commerce company in China, generated about US$110bn revenue in 2020. Given that China is the biggest consumer market in many items and a unified market, it is unlikely that MELI can achieve US$100bn revenue? If that being the case, what do you think is the more achievable revenue target? What about valuation? Both Amazon and Alibaba are trading at 4-5x P/S now, SEA are Shopify are much higher but are they sustainable? Thanks!
Good point. I think it's somewhat unfair to compare Alibaba and Meli as they operate with a very different customer base, have distinctly different core operations and are vastly different in scale - however Meli has potential to really expand revenue in several important ways.
1) and probably the most exciting aspect is the payments (pago) which has the ability to boost revenues substantially. Compared to Square (who currently generate about $10B) there is plently of room to grow.
2) the e-commerce aspect is seemingly just taking off as people are getting used to purchasing goods online.
As an estimate, I could see Meli increasing overall revenue to somewhere between $10B-$20B within 3-5 years based on these high growth areas. Nowhere near Alibaba, though China's GDP is roughly 3X the size of Latin America.
As for valuation, you're correct, valuations are relatively stretched for both SEA, Shopify and somewhat Meli. There is a risk of contracting valuations over the coming years, however Meli are still firmly in their growth stage, so it's difficult to give any specific answer on this one.
Thanks!
Lots of good points - you are comparing Latin America to USA and while it is true that the population of the former is roughly double that of the latter, it is worth pointing out that the US economy is currently roughly 5 times larger; US gdp ~21 trillion vs Brazil+Mexico+Argentina+Columbia+Chile ~4.1 trillion.
Yes, that is an incredibly important distinction to bring up, thanks.
I think you are correct, you would be taking a bet on the continued GDP growth in Latin America over a long period of time - but I also see it as an opportunity. I can see that gap between the US and LatAm closing somewhat over the next 10 years, but it will undoubtedly take a long time before the economy grows to similar levels of the U.S.
'weaved its tenticles' - testicles?
😂