Tim Travis

Thoughts on $MELI I think investors spend far too much time worrying about what $MELI will earn next quarter or next year and far too little time thinking about what this business could become over the next decade. Rising delinquencies, slower growth in Mexico, and margin pressure from free shipping are all worth watching. But I’ve owned $MELI long enough to remember dozens of concerns that seemed incredibly important at the time and are almost meaningless today. Here’s something I’ve learned over the years. The problems facing a growing business will constantly change. Some will disappear, others will emerge, and a few will become serious. Your job as an investor isn’t to predict every problem. It’s to understand whether the business is becoming stronger or weaker as it works through them. And that’s what matters to me with $MELI. Is its competitive position strengthening? Are more people becoming dependent on its ecosystem? Is it building advantages that competitors will find increasingly difficult to overcome? And most importantly, can it continue reinvesting capital today to create substantially more earning power in the future? Of course, that doesn’t mean giving management a free pass. Credit deserves close attention because there’s an enormous difference between temporarily sacrificing profits to strengthen a business and permanently sacrificing profitability because the underlying economics are deteriorating. But here’s the bigger point. A company can report wonderful margins today while losing its competitive advantage. Another can report disappointing margins while building a business that will be worth several times more a decade from now. If you only look at the numbers, you might completely misunderstand what’s happening. Ultimately, I care much more about what $MELI’s competitive position, earning power, and cash generation will look like ten years from now than what its margins look like this quarter or next year. Naturally, the price we pay for that future matters enormously. 🌹