Latin American stocks gets ready for a US debut: VTEX, Nubank and Ebanx
Latin American Stocks: Rising from the ashes of COVID, Latin American tech companies are en fuego (fire) — growing fast and taking their buenos onda (good vibes) to the US stock market.
Universal technology: E-commerce and fintech
The pandemic brought growth to a grinding halt in emerging markets like Latin America (LATAM). While they took longer to recover, their growth is expected to exceed developed markets’ by the end of the year.
With a population doubling the US’, of 650m across 33 countries, LATAM’s market potential is serious business — especially in two industries spotlighted the past year:
- E-commerce: Before the pandemic, only 34% of consumers aged 15+ bought goods over the internet (vs. 84% in the US).
- Fintech: Many LATAM countries are heavily underbanked — with 50% of Mexico and 33% of Brazil lacking access to banking products.
During COVID, millions of people opened bank accounts (many with modern digital banks) to store cash handed out by the government — propelling the digital banking industry.
And e-commerce… Which is almost self-explanatory by now.
Latin American stocks: Bringing diversity to the US markets
Over the years, US investors had few ways to access the LATAM market. Mercado Libre (NASDAQ:MELI) — the LATAM version of Amazon with a massive financial services division — is one of the biggest LATAM stocks traded in the US.
But US investors are about to get more access to LATAM companies:
- Dlocal (NASDAQ:DLO) — a cross-border payments company connecting global sellers to emerging markets.
- Nubank — the world’s second-largest digital bank is planning to go public in the US.
Up next is VTEX (NASDAQ:VTEX), a Brazilian e-commerce platform, which is expected to go public this week. The company helped global brands access Latin America and now it’s doubling down on North American and European markets.
Investors: Pay up for growth
Keep an eye out for some of the fastest-growing LATAM tech companies, but don’t forget about the risks:
- Some LATAM countries are politically unstable — which is a very real risk for a company with nearly 50% of its sales (VTEX) in these regions.
- The pandemic after-effects of lost wages could impact LATAM harder than other countries — with lower consumer spending.
Many of these stocks aren’t cheap either. High-growth emerging stocks come with a higher valuation and as long as they continue growing, it’s hard to find a cheap quality one. It’s usually better to start a position in moments of market weakness or pullbacks.