A stock fell nearly 13% after earnings on May 8. By the next morning, Michael Burry had already bought a full position. He posted about it on Substack before the market opened.
The speed of that move tells you almost everything about how Burry thinks. The details of why he moved tell you the rest.
Burry buys MercadoLibre: here’s exactly what he said
“And this morning I purchased a new full position in Mercado Libre MELI in the $1600s. The stock is down on earnings last night,” Burry wrote in a Substack post on May 9, according to Stocktwits.
He then explained the valuation logic behind the purchase. “MELI is now well below my IV15 price, at which I expect long-term 15% annualized returns at 15 years or more,” Burry wrote.
He also pointed out that MercadoLibre does not carry stock-based compensation because its award system is cash-settled, a detail that matters for calculating real earnings power, Stocktwits confirmed. Burry expects the company to generate nearly $40 billion in revenue in 2026, up approximately 30% from 2025 levels.
MercadoLibre shares closed at $1,557.30 on May 12, having fallen below the 50% Fibonacci retracement level from its 2022 to 2025 rally, according to GuruFocus. Burry’s purchase at “the $1600s” means he bought near the initial post-earnings price before the stock continued to slide.
What MercadoLibre’s Q1 earnings actually showed
The earnings report that triggered the selloff was not uniformly bad. MercadoLibre reported Q1 2026 revenue of $8.85 billion, up 49% year over year, its fastest growth pace in almost four years.
It also beat the consensus estimate of $8.37 billion by more than 6%, according to MercadoLibre’s SEC filing. Commerce revenue grew 47% year over year, and fintech grew 51%.
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The problem was profitability. EPS came in at $8.23, missing consensus estimates of $8.47 to $8.75, depending on the source. More significantly, operating income fell 20% year over year to $611 million, with the operating margin compressing 600 basis points to 6.9%, the SEC filing confirmed. Net income dropped 16% to $417 million.
MercadoLibre’s own explanation was direct. The company said it “chose to prioritize long-term growth investments over short-term profitability.” Those investments included free shipping expansion, credit card portfolio growth, first-party inventory, and fulfillment infrastructure.
The provision for doubtful accounts, which reflects credit risk in its lending business, rose to $1.244 billion from $603 million a year earlier, according to Yahoo Finance.
Why Burry’s IV15 framework points to MercadoLibre specifically
Burry’s “IV15” concept is the price at which he estimates a stock will deliver approximately 15% annualized returns over 15 or more years. It is a long-duration valuation discipline that ignores near-term earnings volatility almost entirely. The framework rewards companies with durable competitive positions, large addressable markets, and revenue growth strong enough to compound meaningfully over time.
MercadoLibre fits that profile on several dimensions. It is the dominant e-commerce and fintech platform across Latin America, a region with more than 650 million people and structurally underpenetrated digital commerce. The company operates the region’s largest logistics network, the largest digital payments platform, and a growing consumer and merchant credit business. Its revenue growing 49% year over year at an $8.85 billion quarterly run rate suggests the long-term compounding engine is still running hard, despite the margin compression.
Burry’s specific note about the absence of stock-based compensation is also telling. Many growth companies dilute shareholders through equity awards, which inflates reported EPS when excluded from non-GAAP figures. MercadoLibre’s cash-settled system means reported earnings more accurately reflect actual cash cost, which makes Burry’s 15-year return calculation cleaner.
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What the earnings miss reflects about MercadoLibre’s strategy
The margin compression that spooked the market is deliberate rather than structural. MercadoLibre is investing aggressively in credit, logistics, and cross-border trade at a moment when it has pricing power and market share to defend.
The credit book expansion, which contributed significantly to the doubtful accounts provision, is building a long-term fintech revenue base that currently carries higher near-term cost.
That is exactly the kind of setup Burry looks for. A market that punishes a company for reinvesting aggressively into a durable growth opportunity creates the price dislocation that makes long-term returns attractive. The 13% post-earnings decline was the market reacting to one quarter of margin compression. Burry’s IV15 framework is looking at roughly 15 years of compounding from whatever starting price the dislocation creates.
Key figures from MercadoLibre’s Q1 2026 results and Burry’s purchase:
- Burry’s entry price: “The $1600s,” purchased on May 9 as a full new position, according to Stocktwits
- MELI closing price on May 12: $1,557.30, below the 50% Fibonacci retracement level from its 2022 to 2025 rally, GuruFocus noted
- Q1 2026 revenue: $8.85 billion, up 49% YoY; beat consensus of $8.37 billion by more than 6%, according to MercadoLibre’s SEC filing
- Q1 2026 EPS: $8.23, missing consensus estimates; operating income $611 million, down 20% YoY; operating margin 6.9%, down 600bps, SEC filing confirmed
- Net income: $417 million, down 16% YoY; provision for doubtful accounts rose to $1.244 billion from $603 million, Yahoo Finance reported
- Burry’s 2026 revenue estimate for MercadoLibre: Nearly $40 billion, up approximately 30% from 2025 levels, Stocktwits indicated
- Post-earnings stock decline: Nearly 13% on May 9; market cap approximately $82.76 billion, according to GuruFocus
What Burry’s move signals for investors watching MercadoLibre
Burry is not buying because the near-term earnings picture looks clean. He is buying because the selloff pushed the stock below the long-duration return threshold he requires. That is a very different rationale from momentum buying or consensus chasing, and it carries a different risk profile.
The risk in Burry’s trade is that the margin compression continues longer than expected, or that the credit book expansion proves more costly than the underlying growth justifies.
MercadoLibre is investing heavily at exactly the moment when its credit portfolio is scaling rapidly into new and riskier segments. If credit losses accelerate, the profitability timeline extends further.
The potential upside is that 49% revenue growth at this scale, sustained across commerce and fintech simultaneously, is the kind of compounding that Burry’s IV15 framework is designed to capture before the market fully prices it in.
His purchase is a statement that the post-earnings price created that opportunity. Whether he is right will be visible in MercadoLibre’s next several quarters.
Related: Michael Burry has a blunt message on the stock market for 2026
