3 E-commerce Platforms Dominating Emerging Markets

E-commerce platforms are experiencing rapid growth, fueled by expanding internet access in emerging markets like Latin America and Southeast Asia. Affordable smartphones and 4G/5G networks are boosting connectivity, making emerging markets prime for e-commerce growth and investor interest.

In this promising landscape, investors may want to explore leading e-commerce stocks, including Alibaba Group Holding Limited (BABA), MercadoLibre, Inc. (MELI), and Sea Limited (SE), which dominate these markets.

Expanding connectivity, digital platforms, and infrastructure investments drive e-commerce growth in emerging markets. Likewise, diverse payment options like cash-on-delivery and digital wallets make e-commerce accessible to all, including the unbanked. As a result, the global e-commerce market is projected to exceed $75.12 trillion by 2034, growing at a 14.9% CAGR.

Furthermore, online gaming and eSports are emerging as key drivers of e-commerce growth, fueled by immersive gaming experiences and rising consumer interest. The popularity of competitive gaming further boosts sales of gaming accessories and subscriptions. With the global eServices market expected to reach nearly $470 billion by 2027, its expanding role underscores the dynamic evolution of e-commerce.

Considering these conducive trends, let’s examine the fundamentals of the three above-mentioned e-commerce stocks.

Alibaba Group Holding Limited (BABA)

Based in Hangzhou, People's Republic of China, BABA provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses engage with their users and customers internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others.

On December 5, 2024, BABA launched Pic Copilot, an AI-driven e-commerce design tool in the U.S., tailored for SMEs to reduce photography and design costs while boosting sales. It features advanced tools like virtual try-ons, generating significant savings and enhanced marketing performance during its successful Black Friday trial.

In terms of the trailing-12-month EBITDA margin, BABA’s 18.16% is 59.2% higher than the 11.41% industry average. Its 8.75% trailing-12-month levered FCF margin is 94.3% higher than the 4.50% industry average. Similarly, the stock’s 4.90% trailing-12-month Return on Total Assets is 22.9% higher than the 3.98% industry average.

For the second quarter ended September 30, 2024, BABA’s revenue increased by 5.2% year-over-year to RMB236.50 billion ($32.38 billion), and its income from operations was RMB35.25 billion ($4.83 billion), up 4.9% year-over-year.

BABA’s non-GAAP net income and EPS were RMB36.52 billion ($5 billion) and RMB1.88 for the quarter, respectively. Furthermore, the company’s adjusted EBITDA for the quarter was RMB47.33 billion ($6.48 billion).

For the quarter ending December 31, 2024, BABA’s EPS and revenue are expected to increase 3.9% and 5.4% year-over-year to $2.74 and $38.14 billion, respectively. Over the past nine months, BABA’s stock has gained 19.3% to close the last trading session at $86.08.

BABA’s POWR Ratings reflect this optimistic outlook. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has a B grade for Growth, Momentum, Sentiment, and Quality. It is ranked #9 out of 43 stocks in the A-rated China industry. To get additional grades of BABA for Value and Stability, click here.

MercadoLibre, Inc. (MELI)

Headquartered in Montevideo, Uruguay, MELI operates online commerce platforms in Latin America. It operates in two segments: Mercado Libre Marketplace and Mercado Pago FinTech platform. The company offers an automated online marketplace for buying and selling, as well as a financial technology platform for online transactions and payments.

In terms of the trailing-12-month gross profit margin, MELI’s 52.46% is 39.3% higher than the 37.66% industry average. Its 3.95% trailing-12-month Capex / Sales is 35.1% higher than the 2.93% industry average. Also, the stock’s 6.35% trailing-12-month Return on Total Assets is 59.4% higher than the 3.98% industry average.

During the fiscal third quarter that ended on September 30, 2024, MELI’s net revenues and financial income increased 35.3% year-over-year to $5.31 billion. The company’s gross profit rose 16.4% over the prior-year quarter to $2.44 billion. For the same quarter, its net income and EPS increased 10.6% and 9.4% from the year-ago values to $397 million and $7.83, respectively.

Street expects MELI’s revenue for the quarter ending December 31, 2024, to increase 38.5% year-over-year to $5.90 billion. Its EPS for the quarter ending March 31, 2025, is expected to grow 9.7% year-over-year to $7.44. It surpassed the EPS  estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 10.2% to close the last trading session at $1,732.76.

MELI’s POWR Ratings reflect its strong fundamentals. MELI has a B grade for Momentum and Quality. Within the A-rated Internet industry, it is ranked #32 out of 49 stocks. To see MELI’s ratings for Growth, Value, Stability, and Sentiment, click here.

Sea Limited (SE)

SE and its subsidiaries engage in digital entertainment, e-commerce, and digital financial services internationally. It offers the Garena digital entertainment platform, allowing users to access mobile and PC online games, and promotes eSports operations.

In terms of its trailing-12-month levered FCF margin, SE’s 11.08% is 24.3% higher than the 8.91% industry average. Likewise, the stock’s 0.78x trailing-12-month asset turnover ratio is 58.6% higher than the 0.49x industry average.

SE’s revenues for the third quarter, which ended on September 30, 2024, increased 30.8% year-over-year to $4.33 billion. Its gross profit rose 29.1% over the prior-year quarter to $82.89 million. SE’s net income and EPS were $153.32 million and $0.24, compared to a net loss and loss per share of $143.98 million and $0.26, respectively.

Analysts expect SE’s EPS for the quarter ending December 31, 2024, to rise significantly year-over-year to $0.70. Its revenue for the same quarter is expected to increase 27.3% year-over-year to $4.60 billion. Over the past year, SHOP’s stock has gained 184.2% to close the last trading session at $109.65.

SE’s POWR Ratings reflect this optimistic outlook. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has an A grade for Growth and a B for Momentum and Quality. SE is ranked #21 in the Internet industry. To access the additional grades of SE for Value, Stability, and Sentiment, click here.

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BABA shares . Year-to-date, BABA has gained 12.10%, versus a 26.79% rise in the benchmark S&P 500 index during the same period.

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.

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