The Argentine e-commerce platform MercadoLibre, which has been dubbed "the Amazon of Latin America," entered the Bitcoin market. The company, which has several branches in the United States, revealed that it had purchased nearly $ 8 million worth of Bitcoin.
Mercado Libre buys Bitcoin to safeguard the company's Treasury
According financial highlights of the company's first quarter of 2021, it was important to take calculated steps in the Bitcoin market to secure its cash balance as other US companies have done this year. Excerpts from the company's financial report say:
"As part of our treasury strategy, this quarter we purchased $ 7.8 million worth of Bitcoin, a digital asset that we are disclosing within our indefinite-lived intangible assets".
Buying that much Bitcoin may seem like a big gamble on the asset to critics, but when we look back at the company's losses, it becomes clear why MercadoLibre is taking a chance on Bitcoin. Unfortunately, net losses soared when the company's shares fell.
"Net income before taxes was $ 9.5 million, compared to a loss of $ 16.7 million during the first quarter of 2020. The net loss was $ 34.0 million, resulting in a net loss per share of $ 0.68". – Free market.
Foreign losses were massive as well, as the USD buying process became more difficult with the country's new policies.
"We had losses in foreign currency of $ 15.1 million, mainly attributable to the additional cost of valuing US dollars through an indirect mechanism in Argentina due to the restrictions imposed by the Argentine government to buy US dollars at the official exchange rate." – Free market.
Mercado Libre remains bullish on Bitcoin as a long-term asset
Clearly, the problem of evaluating an asset is not one that cryptocurrency users face. Because there is no centralized organization that governs the market, institutions and investors can buy assets instantly, at will. This could be one of the reasons the company is considering an alternative asset like Bitcoin.
The new development comes shortly after the e-commerce and payment platform enabled a new feature that allows its users to make real estate purchases using Bitcoin. Juan Manuel Carretero, Commercial Director of Vehicles and Real Estate of Mercado Libre then made a bullish statement in which he recognized the multiple advantages that Bitcoin brought for real estate operations, buyers and sellers.