South American MercadoLibre Adds $7.8 Million worth Bitcoin to its Treasury
The online marketplace company also posted a larger quarterly loss, hit by a higher tax bill. Meanwhile, its fintech arm, Mercado Pago, reported a surge of 81.8% in total payment volume during the pandemic.
Argentina-based online marketplace MercadoLibre Inc incorporated in the US is the latest company to invest in Bitcoin. The SEC filing reads,
“As part of our treasury strategy this quarter, we purchased $7.8 million in bitcoin, a digital asset that we are disclosing within our indefinite-lived intangible assets.”
The South American company’s move to Bitcoin in order to protect from currency debasement came as MercadoLibre posted a larger quarterly loss on Wednesday, hit by weak margins and a higher tax bill.
The income expense of the company soared to $43.5 million in the first quarter ended March 31, from $4.4 million a year earlier, while its gross profit margin shrunk by about 5% to 42.9%. Meanwhile, net loss rose over 61% to $34 million, and excluding income tax expenses; the company posted a net income of $9.5 million.
MercadoLibre’s foreign currency losses were $15.1 million due to additional costs for buying U.S. dollars following restrictions imposed by Argentina’s government.
The company is also increasing investment in key areas like fintech services and warehouses as it faces competition from the giant like Amazon.
Quarterly revenue meanwhile more than doubled to $1.4 billion. With the second wave of Covid-19 hammering Brazil, which comprised 56% of the company’s total revenue, the surge in online shopping and digital payment in the region and neighboring countries, including Argentina, sustained.
Its fintech arm, Mercado Pago, reported a surge of 81.8% to $14.7 billion in total payment volume as the company revs up its digital payments engine during the pandemic.