Hayden Capital, LLC on MercadoLibre, Inc.

Hayden believes MercadoLibre's heavy investment in faster shipping and free delivery on low-ticket products is creating attractive long-term economics despite depressing near-term profitability. The company has spent approximately $2.2 billion on the initiative, while new buyers increased by roughly 18 million over the last twelve months, materially above the growth Hayden estimates would have occurred without the investment. Existing users are also transacting about 15% more frequently, increasing the value of the existing customer base alongside faster customer acquisition. Hayden estimates the program could generate approximately 18% incremental ROIC if contribution margins simply normalize toward historical levels, and potentially around 37% if advertising take rates rise as merchant competition for customer attention increases. The market has not yet given MercadoLibre credit for this potential payoff, with the shares down roughly 34% from their prior high. Hayden expects that if customer cohorts mature as anticipated, the shares could eventually re-rate toward prior valuation levels and potentially beyond them because the company would emerge with a larger customer base and improved unit economics.