Netflix and MercadoLibre Are Underperforming the S&P 500. Here's the 1 Stock I'd Buy in August.

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Back to Basics: Why MercadoLibre Beats Netflix for Now

Netflix and MercadoLibre are beaten down, but only one makes sense for investors this August.

Netflix is struggling with slowing revenue and margin pressure, reflected in its recent 38% share price drop. The reintroduction of free trials signals management's concern over subscriber growth, which is no small woe given their enormous user base. On the other hand, MercadoLibre, although down 23%, still posts aggressive 50% revenue growth and benefits from Latin America’s accelerating shift to e-commerce, a dynamic that’s hard to ignore from a JSE perspective. While we don’t have a direct MercadoLibre equivalent locally, think of it as a proxy for exposure to fast-growing emerging digital markets, somewhat akin to the tech-growth aspirations investors place in Prosus. The rand’s performance (USD/ZAR) could also amplify exposure, as currency volatility impacts earnings converted back home. Netflix’s cheap forward price-to-earnings multiple (around 19x) tempts value hunters, but the growth slowdown and competitive streaming landscape make it less compelling here. If the Latin American boom fizzles or regulatory issues hit MercadoLibre hard, this view could prove faulty. this is just our opinion and not financial advice