MercadoLibre vs. Etsy: Which Internet-Commerce Stock Should You Bet On?

As online shopping continues to evolve, supported by digital payments, marketplace innovation and changing consumer preferences, the key question for investors is which internet-commerce player is better positioned to deliver stronger returns in the periods ahead.

The Case for MercadoLibre

MercadoLibre has evolved far beyond an online marketplace into Latin America's most comprehensive digital commerce and financial services ecosystem. The company combines e-commerce, digital payments, consumer and merchant lending, advertising, logistics, and savings and investment solutions on a single platform, creating multiple growth engines that reinforce one another. Rather than maximizing near-term profits, management continues to invest aggressively to expand this ecosystem, believing that stronger customer engagement today will translate into higher cash generation and profitability over the long run. 

One of MercadoLibre's biggest competitive advantages is its deeply integrated commerce platform. Continuous investments in fulfillment infrastructure, free shipping, first-party retail operations and cross-border trade have strengthened product selection, improved delivery speeds and enhanced the overall customer experience. These initiatives encourage shoppers to purchase more frequently while attracting additional merchants to the platform. Management views logistics as a long-term competitive moat that supports higher customer retention and reinforces its leadership position across Latin America. 

Mercado Pago is another powerful reason to own the stock. What began as a payments solution has expanded into a full-fledged digital banking platform offering payments, savings, investments, credit cards and lending products. The company continues to deepen customer relationships by cross-selling financial services to marketplace users, allowing engagement in one business to fuel growth in another. Management also believes its proprietary transaction data enables better underwriting decisions, supporting disciplined expansion of its credit portfolio while strengthening customer loyalty and increasing lifetime value.

Another key strength is MercadoLibre's relentless focus on innovation. Artificial intelligence is now embedded across both its commerce and fintech operations, improving product discovery, advertising effectiveness, logistics efficiency and customer service. AI-powered search is helping shoppers find more relevant products, while intelligent tools are increasing productivity for employees and merchants alike. At the same time, the company's rapidly growing advertising business is emerging as an attractive high-margin revenue stream, leveraging first-party customer data and high marketplace traffic to attract greater marketing spending from sellers. 

The combination of a rapidly expanding ecosystem, disciplined execution and continued investment in innovation leaves MercadoLibre well-positioned to strengthen its competitive advantage as digital commerce and financial services continue to evolve across Latin America.

The Case for Etsy

Etsy stands out as a differentiated e-commerce platform with a marketplace centered on unique, handcrafted and personalized products that create meaningful connections between buyers and independent sellers. This distinctive positioning creates a durable competitive advantage, helping Etsy attract shoppers looking for products that are not easily available elsewhere. Management is now focused on strengthening this advantage by improving discovery, increasing personalization and building deeper relationships with both buyers and sellers. Early signs suggest these initiatives are beginning to improve marketplace health. 

During the first quarter of 2026, marketplace gross merchandise sales (GMS) increased 5.5% year over year to $2.5 billion, with the growth rate improving 540 basis points from the fourth quarter of 2025. Active buyers also returned to sequential growth for the first time in two years, indicating that the company’s strategic priorities are starting to influence customer behavior. 

Etsy is growing investments in artificial intelligence and personalized shopping experiences. The company is redesigning its search and recommendation engines to better understand buyer preferences, shopping intent and the unique nature of its inventory. These improvements are making it easier for customers to discover relevant products while encouraging them to explore more categories and shopping occasions. Etsy is also enhancing its mobile app, where personalized recommendations, stronger customer engagement and direct communication channels are creating a richer shopping experience. 

App GMS increased 11.2% year over year and represented about 47% of total marketplace GMS. Etsy is also expanding its presence in agentic commerce through partnerships with OpenAI, Microsoft and Google. Management highlighted encouraging early traffic and high-intent engagement from these integrations and recently developed an Etsy app for ChatGPT, reinforcing its strategy to capture AI-driven product discovery as the technology evolves.

Another compelling investment driver is Etsy's renewed focus on strengthening both sides of its marketplace. The company is investing in helping sellers manage their businesses through AI-powered tools that simplify shop management and product listings, allowing creators to spend more time designing new products and serving customers. During the first quarter, Etsy also developed a seller-focused AI Shop Assistant designed to provide actionable insights while reducing operational complexity. Active sellers increased 3.3% year over year to 5.6 million, marking the first period of seller growth since Etsy introduced its seller setup fee. Management believes these efforts will improve seller retention, strengthen inventory quality over time and enhance the buyer experience.

Etsy expects marketplace GMS to grow in every quarter of 2026 and guided low-single-digit growth for the full year. For the second quarter, management expects Etsy’s marketplace GMS to be $2.48 billion-$2.53 billion, implying growth of 3% to 5%. The company remains focused on areas within its control, including accelerating product innovation, improving personalization, increasing marketing efficiency, and strengthening buyer and seller relationships.

Despite the encouraging operational progress, Etsy’s investment case is not devoid of risk. While active buyers improved sequentially, they were still down 2.1% year over year, with repeat buyers declining 3.2% to 34.6 million and habitual buyers falling 5.7% to 5.9 million, though management noted moderation in sequential declines. These cohorts are important because they support recurring demand and stronger purchase frequency. At the same time, first-quarter GMS benefited from temporary factors, including foreign exchange tailwinds, tariff-related seller price increases and higher average order values, all of which are expected to moderate through the remainder of 2026.

MELI vs. ETSY: How Do Estimates Stack Up?

The Zacks Consensus Estimate for MercadoLibre’s current financial-year sales and earnings per share implies year-over-year growth of 39.7% and 4.1%, respectively. For the next fiscal year, the consensus estimate indicates a 26.6% rise in sales and 44.4% growth in earnings.

Over the past 30 days, the consensus estimate for earnings per share for the current fiscal year has increased to $41.00 from $40.97. However, for the next fiscal year, it has fallen to $59.18 from $60.22.

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The Zacks Consensus Estimate for Etsy’s current financial-year sales suggests a year-over-year decline of 2.6%, while estimates for earnings per share call for growth of 291.4%. For the next fiscal year, the consensus estimate indicates a 3.5% rise in sales and 17.1% growth in earnings.

The Zacks Consensus Estimate for Etsy's earnings per share has been revised downward. The consensus estimate for the current fiscal year has fallen from $5.55 to $5.44, while the estimate for the next fiscal year has moved down from $6.40 to 6.37 over the past 30 days. 

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MELI vs. ETSY: A Look at Past Three-Month Stock Performance

MercadoLibre has underperformed Etsy over the past three months. While MercadoLibre shares have gained 3.9%, Etsy stock has rallied 34.4% during the same period.

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MELI vs. ETSY: A Peek Into Stock Valuation

MercadoLibre trades at a forward 12-month price-to-earnings (P/E) ratio of 36.19, above its one-year median of 34.46 and the industry average of 20.72. In contrast, Etsy’s forward 12-month P/E ratio of 14.48 is below both its one-year median of 20.00 and the broader industry average.

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MELI vs. ETSY: Which Stock Should You Bet On?

Although Etsy offers a more attractive valuation and has recently delivered stronger share-price performance, MercadoLibre appears to be the better investment choice at present. Its leadership in Latin American e-commerce, expanding fintech ecosystem, advanced logistics network, growing advertising operations and continued investment in artificial intelligence provide it with broader and more durable growth drivers. Meanwhile, Etsy is making meaningful progress through product innovation, AI initiatives and marketplace improvement. However, with demand trends still stabilizing and earnings estimates moving lower, its turnaround remains a work in progress. Overall, MercadoLibre's stronger growth profile, diversified business model and broader competitive moat make it the more compelling investment at this stage.

While MercadoLibre carries a Zacks Rank #2 (Buy), Etsy carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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