eBay's Shadow Clouds MercadoLibre's Future

It takes nerve these days to venture out into the volatile public markets with a stock offering.

Already two companies on the slate for an IPO last week -- alt-energy company NanoDynamics and fingerprinting-device maker Cross Match Technology -- have formally postponed their plans for an offering.

One that did push forward is MercadoLibre, an Argentina-based online-commerce company in which eBay owns a 19.7% stake.

MercadoLibre priced its shares Friday at $18 and has nearly doubled to $34.75 in recent trading.

Since launching its initial operations in Argentina in 1999, MercadoLibre has expanded into 12 countries throughout Latin America, including large economies such as Mexico and Brazil and, most recently, Costa Rica, Dominican Republic and Panama.

MercadoLibre's market is still somewhat small. Its gross merchandise value (the total value of goods and services bought and sold through its sites) was $1.1 billion last year, and $313 million in the first quarter of 2007. By contrast, eBay's GMV last year was $25 billion in the U.S. alone.

But that leaves lots of room to grow. Latin America's combined gross domestic product is $3 trillion (about 6% of the world's) vs. $13 trillion for the U.S. The number of Internet users in Latin America has been growing 31% a year this decade, compared with the 13% annual growth in North America, according to InternetWorldStats.com.

That explains why MercadoLibre's revenue and profit have been growing at a much faster rate than eBay's. Revenue grew 85% last year to $52.1 million. In the first quarter, it grew 50% to $16.5 million.