By Lucinda Elliott
BUENOS AIRES, April 29 (Reuters) - MercadoLibre could sell parts of its fast-growing loan book to support its fintech business, its chief executive told Reuters, adding that operations in Venezuela remain small and unchanged, as investors weigh credit risk ahead of first-quarter earnings.
"We could sell part of the loan book ... in order to find the right funding tools," Ariel Szarfsztejn said in an interview on Tuesday in Buenos Aires, stressing there were no plans to sell core
businesses or dismantle fintech arm Mercado Pago.
Shares in Latin American e-commerce giant MercadoLibre fell earlier this year as investors grew more cautious about rapid credit-card growth at Mercado Pago and rising investment costs. In February, the company missed quarterly profit estimates after heavier spending on logistics, free shipping and credit cards.
"The toughest challenge for a credit portfolio that is growing so fast is having the right funding mechanisms in order to scale," Szarfsztejn said.
MercadoLibre is deploying generative artificial intelligence to improve credit decisions, he added, allowing the company to score customers better and lend money more effectively.
Szarfsztejn also played down expectations around a warehouse the company opened in China late last year, calling it a "test and learn" move that "doesn’t move the needle" on investment spending.
VENEZUELA STANCE UNCHANGED
Szarfsztejn, 44, who took over in January from co-founder Marcos Galperin, offered MercadoLibre's clearest response yet on Venezuela after political upheaval earlier this year prompted investors to reassess the country.
"We have a small operation there. It's operating normally," he said, adding that MercadoLibre runs only an e-commerce marketplace in Venezuela and does not actively operate fintech services there.
Companies from energy to banking are taking a fresh look at Venezuela following the U.S. ousting of President Nicolas Maduro and moves by Washington to ease some financial restrictions.
Szarfsztejn said MercadoLibre, which has operated in Venezuela for over two decades but excluded the country from its main financial results in 2017 due to capital controls, has seen no material developments that would change its strategy.
"The moment in which we see changes in the environment, that will allow us to do something different from what we are doing, we will try to capture that," Szarfsztejn said.
The company has not engaged with U.S. authorities on Venezuela, he said, adding that Brazil and Mexico remain priorities.
MercadoLibre, which operates in 18 countries, faces growing competition from global players including Amazon, Temu and Sea Ltd's Shopee, particularly in Brazil, its largest market.
Still, the company has not changed strategy. Szarfsztejn said investments in logistics reflect the scale of Latin America's opportunity rather than competitive pressure.
After the recent selloff, Wall Street remains broadly bullish. Most analysts recommend buying the stock, with average forecasts pointing to gains of more than 35% over the next 12 months.
Investors will get a fresh test of that optimism in early May, when MercadoLibre reports first-quarter results.
(Reporting by Lucinda Elliott in Buenos Aires. Additional reporting by Andre Romani. Editing by Cassandra Garrison and Mark Potter)
