2 Stocks Down Over 30% to Buy Right Now and Hold for the Next Decade

Both MercadoLibre (MELI) and Axon Enterprise (AXON) are cited as trading ~33% below their recent highs, framed as attractive long-term entry points. MercadoLibre highlights Q1 strength with a 42% year-over-year revenue increase and +26% active buyers to 84M, supported by expanded services including credit offerings for the underbanked. Axon’s software-first shift is supported by its Draft One AI tools, with AI-driven demand more than doubling last year and generating $750M+ in bookings, though management notes margins have fallen due to tariffs and higher software investment while guiding for improved margins through 2028.

Analysis

MercadoLibre’s edge is increasingly less about GMV and more about funding a self-reinforcing ecosystem: logistics density, payments, and credit underwriting all lower customer acquisition costs over time. The second-order winner is its local merchants and logistics partners, while the obvious losers are lower-quality regional e-commerce platforms and payment rails that cannot subsidize shipping or extend consumer credit. The main risk is that the same reinvestment that widens the moat also masks near-term margin fragility; if credit losses or fulfillment costs rise faster than transaction monetization, the multiple can compress even with strong top-line growth.

Axon’s real setup is software mix expansion, not hardware unit growth. AI-enabled workflow tools create switching costs that are stickier than TASER refresh cycles, which should benefit agencies that standardize on one vendor and hurt legacy public-safety software vendors that rely on fragmented procurement. The market may be underestimating conversion risk: bookings are a leading indicator, but revenue and margin inflection depend on implementation cadence, procurement budgets, and whether AI features remain budget-priority items over the next 2-4 quarters.

The contrarian view is that both names may be “quality at a price,” not classic dip buys. For MELI, the consensus may be too relaxed about competitive price pressure from cross-border entrants; for AXON, the consensus may be too aggressive in assuming software margin expansion will happen on schedule. The thesis is falsified by any sustained deceleration in unique buyer growth, rising credit losses, or a step-down in AXON’s bookings-to-revenue conversion and margin guidance. Over a 6-18 month horizon, both can work, but the entry point matters more than the story.

Key Decisions for Investors

• Long MELI / short SE over 3-6 months: express the view that Latin American scale plus fintech integration can compound through a price war better than a regional e-commerce rival. Falsifier: MELI merchant acquisition costs or credit losses inflect higher while SE stabilizes margins.
• Initiate a starter long in MELI only on a further 8-12% pullback or after the next earnings print confirms transaction growth outpacing fulfillment spend. This is a quality-buy setup, not a chase; risk/reward is better if the market gives a lower entry.
• Long AXON / short MSI over 6-12 months as a software-mix pair: AXON should get more operating leverage if AI tools keep converting from bookings into durable ARR, while MSI is more exposed to slower hardware refresh cycles. Falsifier: AXON margin guidance slips or AI bookings decelerate materially.
• Use AXON call spreads instead of outright equity if you want exposure to the margin-inflection story without paying full premium multiple. Best setup is after a post-earnings retrace, with a 1-2 quarter horizon.
• Watch-list only: if MELI’s next quarter shows credit growth without rising delinquency and AXON sustains bookings growth above revenue growth, add both on weakness; if either metric rolls over, treat the dip as value trap risk.