Nasdaq listing beckons for share trading company eToro

Securities trading platform eToro is to list on Nasdaq in the coming months, valued at $US10.4bn ($13.45bn)
‘We created a new category of wealth management — social investing — and we are dominating the market as evidenced by our rapid expansion’
eToro’s trading platform has 20 million users and executed 75 million trades in January

Stocks and securities trading platform company eToro is set to list on the US Nasdaq exchange in the June quarter in a deal that will value the company at $US10.4bn ($13.45bn).

The trading platform company has seen business boom since the start of the COVID pandemic when a lot of people turned to investing in stocks and shares as a new hobby.

“We created a new category of wealth management — social investing — and we are dominating the market as evidenced by our rapid expansion,” chief executive, Yoni Assia, said.

eToro attracted 1.2 million new registered users to its online platform in the month of January 2021, and its total registered users is now 20 million people in 100 countries.

“We founded eToro with the vision of opening the global market to everyone to trade and invest in a simple and transparent way,” Assia said.

EToro executed 75 million trades in January

The company added 5 million new users to its trading platform in 2020 and generated gross revenues of $605m through growing retail participation and cryptocurrency trading.

Last year’s expansion represented a year on year growth rate of 147 per cent and its trading platform’s growth appears to be accelerating.

In 2019, monthly registrations for eToro’s trading platform averaged 192,000, and by 2020 they were running at 440,000 per month, before hitting 1.2 million registrations in January.

The number of trades executed through eToro’s platform has risen to 75 million in January 2021, from 27 million in 2020, and 8 million trades in 2019.

The company said its rapid rate of growth is supported by new market trends such as rising participation in the retail share market and the growth in trading cryptocurrencies.

Nasdaq listing via SPAC

eToro will list on Nasdaq as eToro Group through the mechanism of a special purpose acquisition company (SPAC) in combination with FinTech Acquisition Corporation.

The transaction includes commitments for $650m from leading investors including ION Investment Group, Softbank Vision Fund 2 and Fidelity Asset Management.

“As a pioneer in the evolution of SPACs, FinTech Masala, our sponsor platform, seeks out companies with outsized growth, effective controls and excellent management teams,” FinTech V chairman, Betsy Cohen, said.

“In the last few years, eToro has solidified its position as the leading online social trading platform outside the US, outlined its plans for the US market, and diversified its income streams. It is now at an inflection point of growth, and we believe eToro is exceptionally positioned to capitalise on this opportunity,” Cohen added.

Existing eToro equity holders, among them current investors and employees of the firm, will remain the largest investors in the new listed entity, retaining 91 per cent ownership.

US investment bank Goldmach Sachs is eToro’s financial advisor for the deal and investment bank Citi is FinTech V’s financial advisor.

Social network for investing

eToro was founded in 2007 and has styled itself as a social investment network that offers users a choice of assets for investment ranging from equities to crypocurrencies.

The company has patented its technology that allows its platform users to communicate with each other and to copy each other’s investment strategies.

“Our users come to eToro to invest, but also to communicate with each other; to see, follow and automatically copy successful investors from around the world,” said Assia.

A company presentation shows that the median age of users in its Bronze membership program is 32 years and their average account balance is $968.

At the other end of the scale, registered users holding eToro’s Diamond membership are a median age of 45 years and have an average account balance of $478,000.

EToro’s trading platform is regulated in the UK, Europe, Australia, the US and Gibraltar.