🔥 U.S. stocks and crypto plunge together, leaving long positions underwater! Crisis or long-term opportunity? Trader breaks down the three key reasons behind the selloff

Trading watchlist: $BTC $ETH $NVDA $GOOGL $ANTHROPIC

On November 5, U.S. stocks and crypto markets suffered a sharp selloff. The Nasdaq fell 5.52%, the Philadelphia Semiconductor Index plunged 12.3%, and NVDA fell about 9%, with semiconductor stocks such as MU and AMD dropping even more. BTC fell below $76,000, while ETH, HYPE, and others also pulled back sharply.

I’m transparent about my live positions: my HYPE, GOOGL, and ANTHROPIC long positions are currently also showing unrealized losses.

But I don’t think this downturn means the long-term cases for AI and crypto assets are over. Some high-quality assets may, in fact, be presenting long-term spot opportunities worth watching.

I. Three reasons behind this selloff

1️⃣ U.S. midterm elections shift expectations for AI investment

The Democratic Party won control of both chambers of Congress, raising concerns that future data center construction, energy supply, and AI infrastructure investment could face stricter regulation.

But this is only the trigger. The deeper question is whether massive AI capital expenditures can translate into sustained revenue and profits. As the market starts questioning returns on investment, valuations may be repriced.

2️⃣ The AI industry shifts from storytelling to proving profitability

In the past, the market was willing to pay high valuations for AI growth. Now, institutions are paying closer attention to orders, revenue, profits, and cash flow.

Chip demand may remain strong over the long term, but data center construction requires massive investment. Financing costs, energy supply, construction approvals, and investment payback periods could all affect the pace of industry expansion.

AI hasn’t disappeared; the market is simply starting to demand that companies demonstrate real profitability.

3️⃣ U.S. stock losses combine with crypto market liquidations

U.S. tech stocks plunged, and risk appetite quickly declined. CoinDesk, citing CoinGlass data, reported that more than $1 billion in leveraged positions were liquidated in the crypto market over the past 24 hours, with longs accounting for the vast majority.

But the crypto market was already under pressure from ETF outflows, shrinking stablecoin supply, and other factors. The decline in U.S. stocks acted as a catalyst, while leveraged liquidations further amplified the losses.

II. Why is Trader starting to look for long-term spot opportunities?

My logic is simple: short-term price declines don’t mean long-term business value has disappeared.

For NVDA, I’m watching AI chip demand and orders; for GOOGL, cloud business and AI commercialization; for BTC and ETH, capital flows and ecosystem development; and for HYPE, platform revenue and token value capture.

Of course, a big drop doesn’t mean an asset is cheap. For assets like ANTHROPIC, which are still subject to valuation expectations, it’s especially important to watch financing, computing costs, and whether future revenue materializes.

III. What will Trader do next?

I handle spot investing and futures trading separately:

• Spot: Build positions in high-quality assets I’m bullish on in batches, spread out the buying period, and don’t go all-in at once trying to call the bottom.

• Futures: Don’t blindly add to positions just because they’re underwater, and never hold on indefinitely. Wait for signs of stabilization, a breakout, and a confirmed retest before looking for opportunities on the right side of the trend.

• Risk management: If fundamentals change or the price structure continues to weaken, reassess instead of stubbornly sticking to the original view.

Tonight at 21:30 Beijing time, the U.S. will also release its October nonfarm payrolls report. The data could further affect expectations for Fed rate cuts and the performance of risk assets.

Trader believes this correction is worth watching, but it’s still too early to declare that a bottom has formed.

Don’t try to call the top or bottom, and don’t chase the first big green candle. The macro sets the direction; the structure determines the entry.

How are you planning to respond to this selloff?

A. Build a spot position in batches

B. Reduce exposure and wait for confirmation

C. Stay bearish and wait for a deeper bottom

D. Wait on the sidelines for now

Let the market provide the answer instead of trying to predict it!

(Personal opinion for discussion only; not investment advice.)
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Falcon_Official2026-11-05 12:31:31

#美股财报季 #Gate股票畅聊季 #MELI 45% Revenue Growth, Yet Margins Keep Falling: Is MercadoLibre Paying Too Much for Expansion?

A Strong Growth Story With One Uncomfortable Number

MercadoLibre delivered another impressive quarter on the revenue front, but the market focused on something much less encouraging: profitability. Third-quarter net revenue and financial income reached $10.75 billion, rising 45% year over year. Total payment volume climbed 53% to $109 billion, while gross merchandise volume increased 38% to approximately $23 billion.

Those figures confirm that Latin America's e-commerce and digital payments markets are still expanding rapidly. Yet MELI shares came under pressure after the results, falling more than 7% at one point in after-hours trading and touching approximately $1,555, according to the supplied Gate market data.

The reason was the gap between growth and earnings. Adjusted EPS came in at $8.83, below the $9.34 consensus estimate. Operating profit was $676 million, and the operating margin slipped to 6.3%, compared with 7.0% in the previous quarter. Revenue is growing quickly, but investors want to know how much profit the company is sacrificing to achieve that growth.

Free Shipping: A Long-Term Advantage With a Short-Term Cost

One of the biggest contributors to margin pressure was MercadoLibre's decision to lower its free-shipping threshold. The strategy encourages more frequent purchases, improves customer retention and makes smaller orders more attractive. However, more orders also mean more deliveries and higher logistics expenses.

There are signs that the investment is beginning to work. Net shipping costs as a share of GMV have declined by approximately 200 basis points since Q1 2025. In Brazil, foreign-exchange-neutral cost per shipment fell 5% year over year and stood 14% below the level recorded before the threshold adjustment. More importantly, in September, free-shipping orders in the 19–79 Brazilian real range generated a positive variable contribution for the first time.

That is an important development. It suggests the strategy is not simply generating volume at any cost. But the improvement has not yet been sufficient to prevent overall margin contraction.

Fulfillment Spending Is Being Recognized Before Peak-Season Revenue

Another pressure point is the company's logistics expansion. MercadoLibre increased its fulfillment network by nearly 20% quarter over quarter ahead of the seasonal demand peak. More facilities, higher energy consumption and temporary staffing created expenses during Q3, while the full benefit of peak-season sales is expected to appear in Q4.

Management expects only a partial reversal of these capacity-related costs in the next quarter. That means investors should not assume margins will immediately return to earlier levels.

The key question is whether this spending creates enough additional order volume and operating efficiency to justify the upfront cost. If the expanded network improves delivery speed and lowers unit economics over time, today's pressure may prove temporary. If utilisation remains weak, the investment could become a longer-lasting burden.

The Warning Signs Beyond Logistics

Shipping and fulfillment are not the entire story. Advertising revenue growth slowed from 73% in the previous quarter to 58%. Fintech monthly active users increased 29%, but credit portfolio growth eased from 75% to 62%.

These numbers deserve attention because advertising and financial services can contribute meaningfully to profitability. Slower expansion in these areas, combined with higher funding costs in Brazil and more cautious lending to riskier borrowers, could make margin recovery more difficult.

There is still evidence of strong engagement. Brazil's e-commerce GMV grew 36% on a foreign-exchange-neutral basis, while items purchased per buyer increased 16%. Affiliate marketing order volume rose 240%, and the network surpassed 12 million members. Credit card issuance reached a record, while the 15-to-90-day nonperforming loan ratio remained stable at 7.0%.

The challenge is turning this stronger customer activity into sustainable earnings rather than relying on continuous investment to maintain growth.

The Bull Case Versus the Bear Case

The bullish argument is that MercadoLibre is deliberately investing ahead of demand. Lower shipping thresholds can increase purchasing frequency, affiliate marketing can attract new customers, and a larger fulfillment network can strengthen its competitive position. If these investments improve efficiency over the next few quarters, current margins may represent an investment trough rather than a permanent decline.

The bearish argument is that competition could prevent those margins from recovering. Nubank is competing for digital-wallet users and financial relationships, while free delivery is increasingly becoming an industry expectation rather than a unique advantage. If customers demand more benefits and sellers push back against platform fees, the industry could settle at lower profitability levels.

This matters even more when MELI trades at a trailing P/E above 47x, based on the supplied figures. A premium valuation requires investors to believe that today's spending will produce stronger earnings tomorrow. If that improvement takes longer than expected, the stock could remain vulnerable even while revenue continues to grow.

What the Analyst Targets Are Really Telling Us

The supplied analyst snapshot shows that most of 26 analysts maintain Buy ratings, with an average price target near $2,272. However, the target range from $1,750 to $2,800 highlights considerable disagreement about the speed of margin normalisation.

The debate is not mainly about whether MercadoLibre can keep growing. It is about how much of that growth will eventually reach shareholders as operating profit.

My Outlook: Watch the Next Two Quarters, Not Just Revenue Growth

I remain interested in MELI's long-term position in Latin American commerce and fintech, but I would not treat strong revenue growth as an automatic buy signal. The next two quarters should reveal whether fulfillment investments begin delivering operating leverage, shipping economics continue improving, and advertising and credit businesses regain momentum.

The most important confirmation would be a stabilisation or recovery in operating margin alongside continued growth in GMV and TPV. If revenue stays above 40% growth but margins continue falling, the market may keep applying a quality discount to the stock.

For me, the central question is simple: Is 6.3% the bottom of a temporary investment cycle, or the beginning of a lower structural margin level?

MercadoLibre has not lost its growth engine. But the next stage of its valuation depends on proving that growth can become more profitable.
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