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Yesterday on

$SE - Q3 results made me more bullish on the business—but not blindly bullish on the stock. Bought some during pre-market hours around ~$72 a share. Shopee is the standout: GMV +23% Core marketplace revenue +51% Adjusted EBITDA +45% That’s real operating leverage. Sea is monetizing transactions much faster than it’s growing them. Garena is quietly becoming a monster cash generator too: EBITDA +46% to $458M. The problem is Monee. Loans receivable reached $12.6B, up 60%. Credit-loss provisions jumped 82%. 90+ day NPLs rose from 1.1% to 1.3%. That doesn’t mean Monee is bad. It means the business is now large enough that underwriting matters enormously. ($MELI has similar issues) Sea also spent $4.4B on loans receivable through 9 months while buying back ~$1B of stock. So the question isn’t whether Sea can grow. It clearly can. The question is whether Shopee + Garena + Monee can turn that growth into high incremental returns on capital. That’s what I’m watching. But i sure do love the price point.

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4d ago on

Today’s add: $VST at pre-market hours $MELI $PDD Fun time.

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6d ago on

$MELI Aftermarket is brutal.. should we take advantage of it? People should really buy shares outside of trading hours.... This is not a panic-sell quarter, in my humble opinion. I think it's more constructive than the headline number suggests. I have a feeling that the market is going to focus on the fact that revenue grew 45% while operating income fell 6%. But that and broad deterioration is different. I see $MELI deliberately buying more engagement and capacity ( kinda similar to $CPNG ) First of all, revenue and income are strong. +45% YoY. And it's not because of currency. All markets reported 36-40+% growth YoY. The engagement metrics are even better. They have 94M unique active buyers and 93M fintech MAUs. Buyers are making about 12 purchases per year vs 50+ in developed markets. In Brazil, items per buyer grew 16% YoY, even after fully lapping the free shipping change. Usage is increasing. Second, I won't ignore the profitability. Operating income is down 6% YoY. Operating margin is down from 6.7% to 6.3% QoQ. Right now, I lean toward the thesis that MELI temporarily sacrificing margin to expand. Management quantified the sequential margin pressure pretty well. 60 bps from shipping, 40 bps from higher sales and marketing, fulfillment square footage +20% QoQm and S&M rose to 11.6% of revenue. The shipping piece is worth of mentioning. They lowered the free-shipping threshold, which means worse economic per order. At the same time, lower AOV means more individual shipments. They are accepting worse shipping economics to encourage customers to buy more frequently. That strategy is working in Brazil. Items sold in Brazil have grown 40+% YoY for 5 consecutive quarters, And we are seeing more purchased items per buyer. Even more interesting, cost per shipment in Brazil was down 5% YoY in local currency. That's pretty encouraging. Third, advertising is quietly becoming a monster. The business grew 58% YoY in USD. MELI isn't just selling banner ads anymore. They're using purchase data to improve targeting and attribution. Their AI advisor now manages campaigns for 56,000 sellers, nearly 4x the number three months ago. That's interesting because advertising is a relatively capital-light revenue stream compared with logistics and lending. So if MELI can continue scaling advertising while the marketplace gets larger, that can become an important source of incremental margin. Now, I do want to call out their credit business... The credit portfolio is now almost $18B, up 62% YoY. That's enormous. And NIMAL fell from 21.0% in Q3'25 to 20.1% in Q3'26. So you've got credit portfolio +62% vs NIMAL -90 bps YoY. That's not something I'd ignore. But the counterargument is actually pretty compelling. The portfolio mix is changing. Credit cards are now 47% of the portfolio, versus 44% a year ago. New card cohorts initially have negative economics because MELI provisions for expected losses upfront, while the interest income develops as cohorts mature. My concern would be that if the credit portfolio keeps growing 60%+, but NIMAL keeps falling, and eventually NPLs start rising, then the economics of the fintech flywheel aren't what we think they are. That's when I'd get genuinely bearish. So..what would make me actually bearish? 1. NPL deterioration + NIMAL deterioration simultaneously. If NPL goes from 7% → 8% → 9% while NIMAL continues falling, that's a different story. 2. Margin doesn't recover when the new logistics capacity gets utilized. If MELI keeps telling us they're investing ahead of volume, but operating margin stays around 6% despite 40%+ revenue growth, then I'm going to question the economics of the reinvestment. 3. Growth decelerates while spending stays elevated. That's the worst combination. If revenue/GMV goes from 40% → 30% → 20% while capex, fulfillment costs, marketing and credit funding remain elevated, then the operating leverage thesis breaks. I don't think the market is necessarily wrong to punish MELI. I think the market is asking whether today's reinvestment will produce tomorrow's margin. If management is right, this quarter could look like a temporary earnings trough inside a much larger earnings trajectory. If management is wrong, we're looking at a company growing revenue at 40%+ while increasingly consuming capital to do it. That's the bet we're actually making with MELI. If it drops below 1,550, I will be a buyer. Otherwise, I am pretty happy with my current position and average price.