Amazon’s history of rapid growth is an epic of evolution from an online bookseller to a full-category e-commerce platform, and then to a comprehensive technology and services behemoth. Leveraging the “Fly Wheel Effect,” strategic patience for long-termism, technology-driven innovation, and an extreme pursuit of user experience, it achieved leapfrog development, profoundly reshaping the global retail industry, cloud computing, and even the landscape of multiple sectors.
For growth stock investors focused on the tech sector, the concept of finding the next Amazon is highly enticing. While success isn’t about simple replication, the e-commerce market is vast enough and serves as an excellent springboard into other business areas.
Over the past decade, the stock price of MercadoLibre (NASDAQ: MELI), the largest e-commerce company in Latin America, has surged approximately 2060%, far exceeding the Nasdaq’s 370% gain. This growth was fueled by the explosive expansion of its e-commerce and fintech platforms across Latin America.
Following Amazon’s model, MercadoLibre operates both first-party and third-party marketplaces. It pioneered the nascent Latin American e-commerce market by building its Mercado Envios logistics network and leveraged its digital payment platform, Mercado Pago, to offer cash-on-delivery options for the region’s unbanked population. From 2014 to 2024, the company’s annual revenue skyrocketed from $557 million to $20.78 billion, representing a compound annual growth rate (CAGR) of 44%. By the end of 2024, its e-commerce marketplace boasted over 100 million annual unique active buyers, and its fintech ecosystem reached 60 million monthly active users.
Despite reaching a market capitalization of $123 billion, MercadoLibre remains significantly smaller than Amazon ($2.48 trillion) and Alibaba ($322 billion). According to Grand View Research, Latin America’s e-commerce market is projected to grow at a CAGR of 16.7% from 2024 to 2030; IMARC Group expects the region’s fintech market to expand at a CAGR of 15.9% during a similar period. Analysts forecast that MercadoLibre’s revenue and EPS will maintain CAGRs of 28% and 34%, respectively, from 2024 to 2027.
The stock currently trades at 36 times next year’s earnings, slightly above Amazon’s 31 times earnings. While short-term macro pressures may cause volatility, its long-term growth drivers remain intact. For those seeking an investment reminiscent of Amazon’s earlier stages, this Latin American leader is a prime candidate.
In a market where valuations are generally lofty, Shopify remains one of the few growth stocks still worth considering. Even though its stock has advanced 115% over the past 12 months, its growth potential is far from exhausted.
The company provides businesses with the tools to set up and operate online stores, solving the technical challenges and costs associated with building an e-commerce platform from scratch. Unlike marketplaces like Amazon and eBay, Shopify allows merchants to build direct relationships with their customers. Its templatized tools and payment solutions lower the barrier to entry, with clients paying a modest monthly fee plus a small percentage of facilitated sales. An estimated 5 million online stores worldwide currently use Shopify’s technology. In the quarter ending June, its platform processed $87.8 billion in merchandise volume, a 31% increase year-over-year; it generated $2.7 billion in revenue for the period, also up 31%, with sustained profit growth expected.
As consumers increasingly value brand authenticity and direct interaction, the standardized marketplace model faces challenges. Shopify allows for high levels of customization, enabling everything from blogs to subscription services. A report by WP Engine indicates that 82% of Gen Z consumers are more likely to trust a company that uses images of real customers in ads rather than actors or models. Crucially, Shopify merchants fully own their customer data, avoiding the risk of losing potential repeat business to competitor diversion on platforms like Amazon.
Although the stock trades at a high valuation of around 100 times this year’s projected earnings (approximately $1.50 per share), its double-digit revenue and profit growth are expected to continue long-term. With the global e-commerce industry projected to grow at an average annual rate of nearly 15% through 2034, driven significantly by the crucial North American market, Shopify is well-positioned to capture more than its fair share. A recent pullback from its early August highs may offer investors an entry opportunity.
