BABA

Alibaba Group Holding Limited

84.11
USD
4.55%
84.11
USD
4.55%
73.28 182.09
52 weeks
52 weeks

Mkt Cap 228.63B

Shares Out 2.72B

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Is This Competitor Coming for MercadoLibre Stock?

The e-commerce industry has been undergoing enormous challenges lately. The industry experienced a massive boom two years ago amid the COVID-19 pandemic lockdowns. Today, that tailwind has become a headwind as most people resume their pre-pandemic lifestyles. The reopening headwind affected every company in the e-commerce industry, including MercadoLibre Inc (NASDAQ: MELI). But that is still not the biggest threat that the company is facing. Shopee is. MercadoLibre has always been the top dog in Latin America MercadoLibre has been an e-commerce powerhouse. Since its IPO in 2007, revenue grew from just $52 million in 2006 to 6.1 billion in 2021 -- or 118 times. By the end of 2021, it had 140 million unique active users who bought more than a billion items from its marketplace. MercadoLibre's success is remarkable since even the e-commerce juggernaut Amazon -- despite its success in many regions, including North America and Europe -- couldn't match its smaller peer in Latin America. According to Statista, MercadoLibre had 668 million monthly visits as of April 2021, while Amazon (the second largest company) had 169 million visits. The former also accounted for around a quarter of all e-commerce sales in Latin America. The rise of Shopee in Latin America Many companies have tried to unseat MercadoLibre's leadership over the last two decades, yet none came close to matching its scale and reach. Enter Shopee, the e-commerce arm of Singapore-based Sea Limited (NYSE: SE). Launched in Brazil in 2019, Shopee has become a serious contender that MercadoLibre hasn't seen the likes of for years. Sea's strategy in Latin America is brutally simple. It reinvests the profits from its gaming business into Shopee by subsidizing users and merchants. So far, the strategy has worked well. According to Sea, Shopee Brazil already ranked first by downloads and total time spent in-app and second by average monthly active users (MAU) in the first quarter of 2022. It became the top app in Brazil by MAU in March and April of 2022. While it's still early to say whether Shopee can retain its newly acquired users -- users come for the subsidies and discounts but leave when the freebies are gone -- investors should keep a close eye on this company. It overtook Lazada in Southeast Asia, even though the latter had many years of head start -- Shopee only launched its service in 2015 -- and access to significant resources from Alibaba. What this means for the industry and MercadoLibre Shopee's entrance into Latin America's e-commerce market would likely be influential. It will spur competition within the industry, leading to better service, better infrastructure, and faster e-commerce penetration. Consumers and online merchants are the direct beneficiaries of this transformation. The former gets better products at potentially lower prices with better service, and the latter gets access to new business channels and opportunities. For MercadoLibre, the effect would be both positive and negative. On the positive end, it will enjoy the tailwinds of faster online market penetration in Latin America. Besides, having a strong competitor can prevent the company from becoming complacent with its past success. The downside is that competition may lead to lower take rates for MercadoLibre, since merchants have new avenues to sell their products online. It can also lead to higher marketing expenses -- via subsidies and discounts -- to retain users. All these can lead to lower margins and profitability in the coming quarters (and years). Still, it is not the end of the world While nobody likes to have a formidable competitor, investors do not need to get overly nervous. The e-commerce market in Latin America is massive (and growing), and can accommodate multiple players. There are examples where a few major e-commerce players can co-exist profitably in a region. For example, there are three major players in China -- Alibaba, Pinduoduo, and JD.com. In the U.S., there are Amazon, Shopify, and Walmart. As long as MercadoLibre continues to delight its stakeholders -- merchants and consumers -- it will remain a significant player in this region. 10 stocks we like better than MercadoLibre When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and MercadoLibre wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of July 27, 2022 John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lawrence Nga has positions in Alibaba Group Holding Ltd., Pinduoduo Inc., and Sea Limited. The Motley Fool has positions in and recommends Amazon, JD.com, MercadoLibre, Sea Limited, Shopify, and Walmart Inc. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Today’s Big Picture Asia-Pacific equity indexes ended today’s session mixed. Hong Kong’s Hang Seng ended the day down 0.21% and Japan’s Nikkei fell 0.88% while Taiwan’s TAIEX rose 0.20%, Australia’s ASX All Ordinaries gained 0.26%, China’s Shanghai Composite advanced 0.32% and South Korea’s KOSPI 0.42%. India’s markets are closed today to celebrate the Islamic New Year which marks the start of the year 1444 AH on the Hijri calendar. By mid-day trading, European equity indices are down across the board and U.S. futures point to a muted open later this morning. With little on the economic data docket today, the more than 350 companies slated to report their quarterly results will take the stock market’s reins today. Ahead of the back-to-back July inflation reports due tomorrow (CPI) and Thursday (PPI) and the impact it could have on interest rate hike expectations, it wouldn’t be surprising to see investor activity today more muted than usual, with the markets in a bit of a holding pattern. At 10 AM ET, President Biden is expected to sign the CHIPS and Science Act. It provides $52.7 billion for American semiconductor research, development, manufacturing, and workforce development. This includes $39 billion in manufacturing incentives, including $2 billion for the legacy chips used in automobiles and defense systems, $13.2 billion in R&D and workforce development, and $500 million to provide for international information communications technology security and semiconductor supply chain activities. It also provides a 25 percent investment tax credit for capital expenses for the manufacturing of semiconductors and related equipment. It’s not going to undo years of offshoring overnight, but it is a step in the right direction towards what we’ll call silicon independence. Data Download International Economy Readers should take a pause to enjoy the fact that there are no market moving economic data points being published today for the international markets. Tomorrow it’s back to business with a number of Consumer Price Indices being published. Domestic Economy The NFIB Small Business Optimism Index edged higher to 89.9 in July, up from June’s 89.5, which was the lowest reading since January 2013. 37% of business owners reported that inflation was their most important problem and 49% had job openings they could not fill. At 8:30 AM ET, the 2Q 2022 preliminary figures for Productivity and Unit Labor Costs will be published. Productivity is expected to be -4.5% vs. -7.3% in 1Q 2022 while Unit Labor Costs are expected to ease to 9.3% vs. 12.6% in the prior quarter. Markets The past few days have resulted in some relatively tame results for markets as investors wait for more updates on inflation and inflation-related economic releases. True, there have been some individual names that have shown earnings-related volatility like yesterday’s Nvidia (NVDA) negative pre-announcement, but for the most part, we seem to be tip-toeing our way toward consensus on Fed moves and their impact. Aside from the Russell 2000’s 1.01% return yesterday, markets ended the day almost flat as the Dow rose 0.09%, the Nasdaq Composite declined a mere 0.12% and the S&P 500 ended the day only 0.10% down. Here’s how the major market indicators stack up year-to-date: Dow Jones Industrial Average: -9.65% S&P 500: -13.14% Nasdaq Composite: -19.18% Russell 2000: -13.54% Bitcoin (BTC-USD): -51.01% Ether (ETH-USD): -54.16% Stocks to Watch Before trading kicks off for U.S.-listed equities, Avaya Holdings (AVYA), Bausch Health (BHC), Capri Holdings (CPRI), Ceva (CEVA), Emerson (EMR), EVgo (EVGO), Global Foundries (GFS), Hyatt Hotels (H), Planet Fitness (PLNT), Ralph Lauren (RL), Spirit Airlines (SAVE), Sysco (SUU), and Warner Music Group (WMG) will be among the companies issuing their latest quarterly results and guidance. With the anticipated grants and credits made possible by the CHIPS and Science Act, Micron Technology (MU) announced plans to invest $40 billion through the end of the decade to build leading-edge memory manufacturing in multiple phases in the U.S. Micron also shared that due to macroeconomic factors and supply chain constraints it has seen a broadening of customer inventory adjustments leading to softer DRAM and NAND expectations since it reported its June 2022 quarterly results. For the current quarter, Micro now sees its revenue at or below the low end of the $6.8-$7.6 billion revenue guidance it provided during its last earnings call. June quarter results at Global Foundries (GFS) bested top and bottom line expectations, and the company issued upside guidance with EPS of $0.59-0.65 vs. the $0.44 consensus and revenue of $2.04-$2.07 billion vs. $1.99 billion for the current quarter. For those unfamiliar with Global Foundries, its end market exposure is 49% smart mobile devices, 17% communications infrastructure and data center, 17% home and industrial IoT, 8% automotive, and 4% personal computing. While Blink Charging (BLNK) reported a 164% increase in quarterly revenue to $11.5 million that included a 154% jump in its Service revenue, its adjusted EBITA swelled to a loss of $15.6 million vs. $8.1 million in the year ago quarter. The company ended the quarter with $85.1 million in cash and 5,631 charging stations contracted, deployed, or sold during the quarter. Fintech company Upstart (UPST) top and bottom line consensus expectations for its June quarter and guided the current quarter below consensus expectations as well. Revenue for the June quarter rose 17.6% YoY to $228 million as its bank partners originated 321,138 loans, totaling $3.3 billion, across the company’s platform up 12%YoY. The conversion on rate requests was 13% in 2Q 2022 down from 24% YoY. For the current quarter, Upstart sees EPS of -$0.11 vs. the $0.20 consensus and $170 million in revenue vs. the $246.58 million consensus. Shares of insurance company Lemonade (LMND) soared in after hours trading last night after reporting its June quarter revenue and EPS topped consensus expectations. The company also reported a 31% increase in customer count YoY alongside an 18% YoY increase in premium per customer to $290. Lemonade issued upside guidance for both the current quarter and 2022. Shares of Allbirds (BIRD) sunk in aftermarket trading after the company slashed its full-year guidance and shared it would be cutting its workforce by ~8%. For the full year, the company now sees $305-$315 million in revenue vs. its prior guidance of $335-$345 million. Shares of Tyson Foods (TSN) fell as the company reported weaker-than-expected quarterly earnings and warned of supply constraints and reduced demand for high-priced beef. Tesla (TSLA) sold 28,217 China-made vehicles in July, down 14.41% YoY and 64.24% MoM. For context, wholesale sales of new energy passenger vehicles in China during July were 564,000 units, up 123.7% YoY and down 1.1% MoM, according to the CPCA. IPOs As of now, no IPOs are slated to be priced this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page. After Today’s Market Close Akami (AKM), Alarm.com (ALRM), Arlo Technologies (ARLO), Axon (AXON), Celsius (CELH), Coinbase Global (CON), Inter Parfums (IPAR), InterActive Corp. (IAC), Plug Power (PLUG), Rackspace Technology (RXT), Roblox (RBLX), SailPoint (SAIL), The RealReal (REAL), The Trade Desk (TTD), and Wynn Resorts (WYNN) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. On the Horizon Wednesday, August 10 Japan: Producer Price Index - July China: Consumer Price Index, Producer Price Index - July Germany: Consumer Price Index - July Italy: Consumer Price Index - July US: Weekly MBA Mortgage Applications US: Consumer Price Index – July US: Wholesale Inventories - June US: Weekly EIA Crude Oil Inventories Thursday, August 11 Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August US: Weekly Initial & Continuing Jobless Claims US: Producer Price Index – July US: Weekly EIA Natural Gas Inventories Friday, August 12 Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August China: China Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August Eurozone: Industrial Production - June US: Import/Export Prices – July US: University of Michigan Consumer Sentiment Index (Preliminary) – August Thought for the Day “When I eventually met Mr. Right I had no idea that his first name was Always.” ~ Rita Rudner Disclosures SailPoint (SAIL) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Plug Power (PLUG), Allbirds (BIRD), Tesla (TSLA), Blink Charging (BLNK) are constituents of the Tematica BITA Cleaner Living Index Plug Power (PLUG), Allbirds (BIRD), Tesla (TSLA), Blink Charging (BLNK) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Today’s Big Picture Asia-Pacific equity indexes ended today’s session down across the board. India’s Sensex ended the day essentially flat, down 0.06%, China’s Shanghai Composite and Australia’s ASX All Ordinaries declined 0.54% and 0.55%, respectively while Japan’s Nikkei fell 0.65%, Taiwan’s TAIEX dropped 0.74% and South Korea’s KOSPI declined 0.90%. Hong Kong’s Hang Seng led the way, down 1.96% on a broad selloff led by Health Technology and Health Services names while Transportation and Communications sectors provided the only relief. By mid-day trading, major European equity indices are down across the board and U.S. futures point to a positive open later this morning. At 8:30 AM ET, the much anticipated July Consumer Price Index (CPI) report was released: The headline figure for the month was expected to fall to 8.7% from June’s blistering 9.1% reading with core CPI that excludes food and energy ticking higher to 6.1% in July vs. 6.0% the prior month. The actual numbers show that inflation hit 8.5%, and core inflation was 5.9%. With the national average retail price for a gallon of gas falling through late June and July from its June 14 high of $5.016 per gallon per data from AAA, forecasters had expected the month over month decline in the headline CPI for July. The July Employment Report also showed wage inflation ran hotter than expected during the month. Let’s also keep in mind that we will be facing a “wash, rinse, repeat” cycle when it comes to inflation data and expectations for the Fed given tomorrow’s July Producer Price Index report. Data Download International Economy Producer prices in Japan rose by 8.6% YoY in July, compared with market forecasts of 8.4% and following an upwardly revised 9.4% the prior month. While marking the 17th straight month of producer inflation, the latest reading was the softest since last December. China's annual inflation rate rose to 2.7% in July from 2.5% in June and compared with market forecasts of 2.9% but even so the July figure marked the highest reading in the last year. The country’s Producer Price Inflation figure for July eased to a 17-month low of 4.2% YoY from 6.1% the prior month and less than the market consensus of 4.8%. Annual inflation rate in Germany was confirmed at 7.5% YoY for the month of July, down slightly from June’s 7.6% reading but still above the March and April figures of 7.3%-7.4%. The annual inflation rate in Italy slowed to 7.9% YoY in July from June’s 8% reading matching expectations for the month. While energy prices declined, prices for food and transportation rose at a faster pace. Domestic Economy This morning we have the usual Wednesday weekly reports for MBA Mortgage Applications and Crude Oil Inventories from the U.S. Energy Information Administration. At 10 AM ET, Wholesale Inventories for June will be published, and the figure is expected to rise 1.9%. While investors and economists will keep more than a passing interest in those reports and data, as we discussed above, it will be the July Consumer Price Index report at 8:30 AM ET that will shape not only how the US stock market opens today, but also expectations for the Fed’s next course of monetary policy action. The U.S. Energy Information Administration (EIA) expects domestic production of crude oil, natural gas and coal will all increase next year compared with this year. It forecast US crude production rising 6.7% to an all-time annual high 12.7M bbl/day in 2023 from 11.9M bbl/day in 2022, US natural gas output climbing to 100B cubic feet (cf)/day from 97B cf/day, and US coal production inching up to 601M short tons in 2023 from an expected 599M this year. The EIA also modestly increased its 2022 average nationwide gasoline price forecast to $4.07/GALLON vs. $4.05 if called for last month. It now also sees 2023 prices at $3.59/GAL vs. its previous forecast of $3.57. Markets Stocks continued in their holding pattern waiting for the latest CPI print save for some fundamental stories pushing Technology names and small caps around. The Dow and the S&P 500 were down slightly at 0.18% and 0.42%, respectively while the Nasdaq Composite dropped 1.19% and the Russell 2000 closed down 1.46% on the day. Energy names led the way yesterday but were overpowered by Technology and Consumer Discretionary sectors. Here’s how the major market indicators stack up year-to-date: Dow Jones Industrial Average: -9.81% S&P 500: -13.51% Nasdaq Composite: -20.14% Russell 2000: -15.83% Bitcoin (BTC-USD): -52.08% Ether (ETH-USD): -55.38% Stocks to Watch Before trading kicks off, CyberArk (CYBR), Fox Corp. (FOXA), Jack in the Box (JACK), Nomad Foods (NOMD), Vita Coco (COCO), Tufin Software (TUFN), and Wendy’s (WEN) will be among the companies issuing their latest quarterly results and guidance. At 9 AM ET, Samsung (SSNLF) will hold its Galaxy Unpacked 2022 at which it is expected to introduce new Galaxy foldable smartphone models, a new Galaxy Watch, and Galaxy Buds. Shares of advertising technology platform company The Trade Desk (TTD) jumped after the company reported quarterly results that topped expectations and guided current quarter revenue above the consensus forecast. The RealReal (REAL) reported a smaller than expected bottom line loss for its June quarter as revenue for the period rose 47.2% YoY to %154.44 million, topping the $153.99 million consensus. However, the company issued downside guidance for both the current quarter and 2022. Revenue for the September quarter is now expected to be $145-$155 million vs. the $164.3 million consensus; for the full year of 2022, revenue is forecasted to be $615-$635 million vs. the $653.7 million consensus. Shares of Coinbase Global (COIN) moved lower after it reported June quarter results that missed top and bottom line expectations. Revenue for the quarter fell 63.7% YoY as Total trading volume fell 53.0% YoY and 29.8% sequentially to $217 billion. Monthly Transacting Users (MTUs) grew 2.3% YoY but fell 2.2% sequentially to 9.0 million. For the current quarter, Coinbase sees the number of MTUs trending lower sequentially and total trading volume to be lower compared to the June quarter. Shares of Sweetgreen (SG) tumbled in aftermarket trading last night after the company missed quarterly revenue expectations, lowered its 2022 forecast, announced it will lay off 5% of its workforce, and downsize to smaller offices. ChipMOS TECHNOLOGIES (IMOS) reported its July revenue was $65.1 million, a decrease of 19.4% YoY and down 7.7% MoM. Taiwan Semiconductor (TSM) reported its July revenue increased 49.9% YoY to NT$186.76 billion, which equates to a 6.2% MoM improvement. Electric vehicle subscription startup Autonomy placed a $1.2 billion order for 23K electric vehicles with 17 global automakers, including BMW (BMWYY), Canoo (GOEV), Fisker (FSR), Ford (F), General Motors (GM), Hyundai (HYMTF), Lucid Group (LCID), Mercedes-Benz (DDAIF), Polestar (PSNY), Rivian (RIVN), Stellantis (STLA), Subaru (FUJHY), Tesla (TSLA), Toyota Motor (TM), VinFast, Volvo Car (VLVOF) and Volkswagen (VLKAF). IPOs As of now, no IPOs are slated to be priced this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page. After Today’s Market Close Bumble (BMBL), CACI International (CACI), Coherent (COHR), Dutch Bros. (BROS), Red Robin Gourmet (RRGB), and Walt Disney (DIS) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. On the Horizon Thursday, August 11 Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August US: Weekly Initial & Continuing Jobless Claims US: Producer Price Index – July US: Weekly EIA Natural Gas Inventories Friday, August 12 Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August China: China Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August Eurozone: Industrial Production - June US: Import/Export Prices – July US: University of Michigan Consumer Sentiment Index (Preliminary) – August Thought for the Day “The release date is just one day, but the record is forever.” ~ Bruce Springsteen Disclosures Tufin Software (TUFN), CyberArk (CYBR) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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