eToro eyes U.S. acquisitions as shares slip despite strong earnings
The trading firm exceeded analysts’ expectations and signaled an appetite for M&A.
Trading platform eToro has released its first financial results since its initial public offering in May. The results exceeded analysts’ expectations, though they fell short of the company’s own high hopes for its debut quarter.
Although eToro’s profit beat forecasts, it was essentially unchanged from the same period last year. The number of active accounts, defined as accounts with funds and ongoing transactions, showed little change from the previous quarter, but rose 14% compared to the same period in 2024.
Founded in 2007 by Yoni Assia, who still leads the company alongside his brother Ronen Assia, eToro allows users to trade a wide range of securities through its app. It also offers accounts without funds or transactions, used purely as tracking portfolios. The gap between the two types of accounts is substantial: out of 40 million registered users, only 3.63 million actively trade securities.
The value of assets under management on eToro’s platform reached $17.5 billion at the end of Q2, up 54% year over year.
In pre-market trading after the results were released, eToro’s shares edged higher, bringing the company close to a $5 billion valuation, about 10% above its IPO value in May. However, after the market opened and management held its conference call, the stock reversed course and began to decline.
From Q2 onward, eToro has offered 24/7 trading in U.S.-listed stocks, though most customer activity remains concentrated in crypto assets. Crypto generated $1.9 billion in gross revenue in the quarter, up from $1.6 billion a year earlier. However, due to high costs, the bulk of eToro’s profit comes from other products.
Net commissions from trading in currencies, stocks, and commodities reached $114 million in Q2, a 37% increase from Q2 2024. Total commission income rose 26% year over year to $210 million. About 20% of net commissions are reinvested in marketing to acquire new customers.
One ongoing concern for investors is eToro’s performance volatility, driven by sentiment in both traditional markets and crypto. Rising markets can increase the value of customer portfolios without necessarily boosting active account numbers.
Assia noted that traditional market activity picked up in Q2 amid Wall Street fluctuations caused by President Trump’s tariff policy announcements. Meanwhile, crypto trading was relatively calm, until July, when new highs in cryptocurrency prices drove a shift in customer activity away from stocks and into digital assets.
For Q2, eToro reported net profit of $30 million, flat year over year, including a one-time IPO expense of $15 million. Excluding one-offs, profit rose 22% to $54 million, or 56 cents per share, beating analyst estimates by 6 cents.
The company ended the quarter with $1.2 billion in cash. Assia indicated eToro may soon deploy some of it: “We see many acquisition opportunities in the U.S. market. There are several interesting fintech companies, and we are actively exploring them.”
eToro originally attempted to go public via a SPAC merger in 2021 at a $10 billion valuation, but regulatory complications related to its crypto business delayed the plan. In its eventual IPO last May, strong demand lifted its valuation. The company raised $700 million, about half of which went to its balance sheet. Management is expected to use its cash war chest to accelerate growth, particularly in the U.S., where it faces dominant competitor Robinhood, currently valued at $100 billion.
