E Inflation Shock

As we move to adopt wider covid-19 jabs for younger people, note that they may be more susceptible to side effects from the vaccination. My middle grandchild, a girl, was knocked out for 24 hours by her first shot. She is 17.

Boris Johnson justifies his hefty spending on décor for his apartment at 11 Downing St, shared with his mistress and baby, because its prior inhabitant, P. M. Teresa May, went in for John Lewis Partnership furnishings. My husband is a member of the John Lewis clan which gave their department stores and supermarkets to the workers but which supplies Mrs. May. Their line of upholstery and window dressing, furniture, and accessories is popular with Britons who don't need to knock the socks off visitors to their homes. Boris Johnson is of part Turkish heritage which may push him to excessive exotica.

Qatar has arrested its finance minister for corruption. South Africa suspended the ANC head Ace Magashule for alleged corruption. But Lebanon has not arrested its central bank governor for moving its dollars into a private offshore bank account with his brother.

Paypal today reported excellent quarterly earnings ($1.22/sh, up 21¢) and the revenues also beat. Alas, it will be offering a digital wallet for crypto-currencies. It will also stop mini-payments that people use to buy what they cannot afford, usually in emerging markets. Read on because we have a share position here.

Foreign markets, starting with London, were up. But the USA is in inflation shock.

We have the usual pileup of reporting companies to deal with today. Markets are up because jobs data were much better than expected, below 500,000 for the first week since Covid-19 started last week.

Businessman, Internet, Continents

*Mercado Libre Q1 sales rose 110% from prior year to $222 bn and merchandise sales rose 114%, in both cases currency-neutral from prior Q1 level of $652 bn. MELI said net sales at $1.38 bn were up 158%. Gross merchandise volume rose 6.1% to $6.1 bn. It boosted its active user count from 3,414 mn to 6,057 mn. (An active user buys at least one thing from MELI in the period covered.)

The problem is that fintech plans for credit to buyers and sellers, free delivery, and credit cards MELI had been working toward became money losers in the pandemic. Revenues were barely up from Q4 2020, at $1.378 bn from $1.327 bn. It engaged in capital expenditures of $112.7 mn in Q1 this year compared to $53.5 mn a year ago. Its depreciation and amortization hit $38.4 mn up from prior Q1 level of $21.6 mn. Net sales while up from Q1 2020 were essentially flat from the rest of last year.

Moreover, MELI had a real net loss of $34 mn in the quarter, hit by interest and finance expenses to its own financing operations plus foreign exchange loss of $13 mn. The problem, in case you were wondering, was to keep selling in its home market, Argentina, a sufferer from a financial crisis. All the new logistics for Mexico and Brazil boosting sales 124% and 92% resp are not enough to overcome the Buenos Aires bank mess which cut items sold. And its new fintech wallet, credit cards for clients, and digital accounts for sellers was not enough to overcome the collapse in Argentina's currency. Unfortunately, it provides more financial service to sellers in Argentina, 87% of whom signed up, its highest penetration level. Brazil is at 83% and Mexico at 79%. Its biggest new market push is in Chile, a country managing better than the rest, but there its financial services are only used by 53% of accounts.

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My company is back to looking for a new on-line payment authorization system because having waived fees from the period when our website was down, Authorize.net now is battling to bill us for them ...

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William K. 1 month ago Member's comment

Always informative and always interesting. Thank You, V.L.