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MercadoLibre, Inc. (MELI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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MercadoLibre, Inc. (MELI)

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Intrinsic Value (DCF)

Current$2,098.85
→
Intrinsic$5,246.68
+150%
$3,481.25$5,246.68$8,754.10
Market implies 3% growth for 5 years
DCF analysis suggests MELI could have 150% upside at 25% growth — verify assumptions match your view.
At $2099, the market prices in only 3% growth — below historical 25%, suggesting low expectations.
Range: Bear $3481 → Bull $8754. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$6680$7227$7810$8430
10%$4500$4862$5247$5656
12%$3351$3616$3897$4197
14%$2644$2849$3067$3299

Bull Case

  • Bull case ($8754) offers 317% upside at 30% growth, 8% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (3%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($3481) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$8.82B
Year 2$11.03B
Year 3$13.79B
Year 4$17.23B
Year 5$21.54B
Terminal$341.32B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$7.06BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is MELI stock undervalued or overvalued?
🟢 UNDERVALUED

MELI trades at $2098.85 vs. our DCF-derived intrinsic value of $3543.22, implying +62% upside. At a 9.5% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of MELI's future cash flows. The bear case ($2346.98) still suggests upside, providing margin of safety.

What is MELI's intrinsic value?

Using a 5-year DCF model: Base FCF of $7.06B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $4.24B net debt and dividing by 0.05B shares: Bear $2346.98 | Base $3543.22 | Bull $5296.71. Current price $2098.85 implies +62% to base case.

How is MELI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($183.87B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.