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Why MercadoLibre's Moat Has Widened

We think the company’s network effect has strengthened.

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We recently raised our economic moat rating for  MercadoLibre (MELI) to wide from narrow based on the firm's increasingly capital-efficient online marketplaces and payment solutions and buyer and seller metrics that indicate a strengthening of its network effect moat source, which should help solidify its market leadership across Latin America.

We had anticipated much of MercadoLibre's 2016 momentum to continue into 2017, with total users (up 20.3%) and unique buyers and sellers (up 20.3% and 14.3% year over year, respectively) pacing consistent with our expectations in the first quarter.

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R.J. Hottovy does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.