MELI IS IN HEAD AND SHOULDERSHeads up. MELI Online E-commerce superstar out of South America is potentially forming a head and shoulders formation on could be an opportunity for some great trading in the next 3-6months on this fast mover.
Discounted Cash Flow Model produces a valuation of $440 using historical growth and margins in forecasting method - around 32% revenue growth. This implies a 27.53% upside. If the model proves correct, the price will correct to its upper trendline at LT resistance.
Relative Pricing model to competitors (AMZN, EBAY, FB, SHOP, TCEHY, and BABA) produces a weighted average share price of $385 or +11.84% upside. If the model proves accurate the price will move to the LT resistance trend line or steadily appreciate relative to its peers.
If the stock corrects below the neckline of the H+S, it will correct to LT support at which would be a solid time to add to your position due to the LT growth prospects of the firm. This will likely be caused by macro risk at which time you should reassess the position to add or exit.
Cheers and good luck!
