The Future Is Now: Mercado Libre Is Worth More than GMBy Daniel González | Fri, 05/22/2020 - 03:00
In 1979, The Buggles, a rock band from London, sang that videos would kill radio stars and even managed to get their message out on the first MTV broadcast. However, despite the success, the prophecy was not fulfilled. Radio remained as safe a value as a car. At the beginning of the week, however, everything changed. Mercado Libre, an online trading platform founded in 1999 in Buenos Aires by Marcos Galperin, a young Argentine entrepreneur, is already more valuable than General Motors (GM), one of the symbols of American industrial power. On Tuesday, the price of Mercado Libre shares soared on the New York NASDAQ index to reach a price of US$823 per share. This boost has led the Argentine company to surpass the US$40.9 billion valuation, thus surpassing giants such as GM or Deutsche Bank. This is not the only riddle left by the COVID-19. In Argentina, GM, once considered one of the most solid and valuable companies in the world, has reached an agreement with Mercado Libre to open a store on the platform from which to sell its products.
According to Clarín newspaper, the stock market valuation of Mercado Libre has grown by 77 percent since April 2 thanks to the confinement of a large part of Latin America´s population, considered to be the company´s main market, and the growth of Mercado Pago, the company’s electronic payment platform. In Mexico, according to David Geisen, Country Manager of Mercado Libre, the company increased its revenues by 81 percent in 1Q20. In addition, the number of users increased to 6.7 million. “2020 is going to be a very good year for the growth of e-commerce, because this situation has helped to change habits. Many people have made purchases online for the first time,” Geisen told Forbes. The buoyant Mercado Libre market dynamic in Mexico could increase over the weekend when the Hot Sale begins, an annual event established in 2014 with the aim of boosting online shopping. This is an opportunity for the Argentine company to shine once again. In fact, organizers expect to surpass the MX$11 billion (US$480 million) in sales in 2019 and without the presence of Amazon, Mercado Libre could be the big winner of this event.
Mercado Libre operates in 18 countries around the world and its growth has put companies like Facebook on alert. Mark Zuckerberg’s company has decided to bet on e-commerce and has done so through an application in which, as in Mercado Libre, anyone can open a virtual store in either Facebook or Instagram. The goal is to make Facebook Shops available before the end of May for US users. We will still have to wait to see it in other markets like Mexico.