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Just wondering if you, Tim, has an updated valuation? And more importantly I was wondering what inputs your value was based on. Mainly the FCF growth rate, discount rate, and any margin of safety you think is adequate. And do you use discount rate that is high enough for MOS or do you use a base discount rate and then apply safety?

I think personally I would pay more than you are willing. I think basically 30x FCF but using 35% tax rate. And MELI is hovering above that. But I just wanted to know your inputs for the value.

eric2800, long MELI
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Just wondering if you, Tim, has an updated valuation?

Yes, I watch this one closely.

Mainly the FCF growth rate, discount rate, and any margin of safety you think is adequate.

It breaks out to a roughly 30% FCF annual growth rate over the next five years and uses a 14% discount rate. That yields a fair value of $30. If we demand a 20$ margin of safety, that means we'd buy at $24.

To your point, however, a 14% DR with a 20% MoS is quite aggressive, so I'd likely get interested again at any price below $30 (which right around where 30x FCF would put you).

Also, you're right to normalize for taxes, particularly in LatAm where tax rates tend to err on the high side.

All of that sad, I've been cheering the recent drops. I would appreciate the opportunity to put MELI back on our scorecard at the right price.

Tim
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Thanks for the quick post. It seems I had about the same price. I don't have my notes with me, but I think with a little MOS I had $26 with a top end ~$32. The only issue that I didn't talk about is the fact that the membership growth rate has slowed considerably. I don't know if this concerns you. But I would like that to start increasing before I buy more.

eric2800 Letting the MELI I do own ride.
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