eToro jumps on Nasdaq debut

"Globes" charts the remarkable nearly 20-year journey of the Israeli online trading platform, which culminated on Wall Street on Wednesday.

Israeli online trading platform eToro (Nasdaq: ETOR) began trading on Wall Street yesterday. The share price ended its first day on Nasdaq up 28.85% at $67, giving a market cap of $5.419 billion. In after-hours trading the share price slipped 1.49%.

Israeli veteran angel investor Eddy Shalev described eToro's flotation as "the culmination of a 20-year journey." After many twists and turns, eToro completed the IPO at a company valuation of $4.3 billion, 10% higher than its planned target.

In the flotation, eToro raised $620 million ($713 million in full dilution) from a range of US institutional investors, headed by BlackRock, the world's biggest asset manager. About half the proceeds from the IPO will fill the company's coffers, with the remainder pouring into the pockets of its founders - brothers Yoni and Ronen Assia and their partner David Ring, and long-time shareholders from Israel and abroad. These include, the Nir and Eli Barkat's BRM Group of brothers Nir and Eli Barkat and Shalev, who sits on the board of eToro, which was founded in 2007. "At first, they were mainly involved in forex trading using a very friendly application," Shalev recalls of the company's early days. "Because of the high leverage and the negative connotation that accompanied financial websites, venture capital funds did not want to invest in eToro. That's why they turned to angels. I came through Yoni and Ronen's father, David Assia (himself a successful entrepreneur in the technology field). I was immediately enthusiastic about the two entrepreneurs and from there the shared journey began."

The person who recognized the potential was Santo Politi, a Jewish businessman and cofounder of US venture capital firm Spark Capital, which invested in Twitter in the early stages. In fact, according to Shalev, they were the only institutional body to invest in the company, which received support mainly from private investors and strategic funds.

Over the years, eToro's activities expanded and it began to offer trading services in additional channels such as stocks, commodities, futures and options. The turning point in eToro's business history came when the company integrated the idea of social networks into its trading platform, which later became the company's hallmark. In fact, eToro allows investors to follow the investments of other users, and even imitate them partially or completely.

Today, nearly 20 years after it was founded, eToro has 3.58 million paying users from 75 countries, up from 3.5 million at the end of 2024. The company expects to end the first quarter of 2025 with net profit of $56-60 million, down from $64 million in the corresponding quarter of 2024. According to the company, this was due to it increasing its investments in growth, in response to the positive market conditions, to benefit from growing interest and accelerate growth in the number of users.

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Due to the decline in profit, eToro points to the Net Contribution, a figure that reflects income from trading fees, which is expected to continue to grow in the first quarter of 2025, which was particularly volatile in the markets. It is estimated at $214-217 million, up about 7% (mid-range) compared with the corresponding quarter. The growth is explained by the increase in trading volumes of retail investors in stocks, commodities and currencies, as well as an increase in interest income.

A strong tailwind for eToro's business is also its early entry into the field of digital currencies, which has gained momentum over the years. At the start of eToro's journey, only 2% of customers were interested in and active in cryptocurrencies. The big turning point came in 2017, with the addition of the Ethereum coin to the platform and its value jumping from about $10 to $400 in just six months. Following this, the company added other cryptocurrencies like Ripple, Stellar, Neo and Dash, and by the end of 2017, about 90% of its customers were trading in cryptocurrencies.

The big winners

In the IPO the founders sold shares. Yoni Assia sold shares for about $28.5 million and Ronen Assia for $13 million. After the sale, Yoni Assia holds shares worth about $339 million (before the rises on the first day of trading), and Ronen Assia holds shares worth about $115 million. The other founder, David Ring, sold shares for $9 million and after the offering will be left with a stake worth $118 million. Relatives of the founders also benefited from the offering. David Assia, the father of Yoni and Ronen and former CEO and co-founder of Magic, sold for $3.3 million, and remained with a stake worth $45.7 million; iAngels, the venture capital investment platform of Mor Assia (Yoni's wife) and her partner Shelly Hod Moyal, sold shares for $2.3 million, and were left with shares worth $33.1 million.

Another beneficiary of the eToro offering is Eli and Nir Barkat's BRM group of and their partner Yuval Rakavy, which invested in the company at a very early stage. The group, which held about 9% until the IPO, sold shares for about $22 million, according to the prospectus, although this amount may be higher since the company increased the amount of shares sold after the prospectus was issued. After the IPO, BRM still holds shares worth about $320 million.

Others who pocketed significant sums in the offering were Spark Capital, which sold shares for $34 million, investment company Andalusian SPV, which sold shares for $32 million, and CM Equities SP, which sold shares for $16 million, according to the terms of the prospectus.

The bumps in the road

There have been many ups and downs on eToro's road to Wall Street. The company began business activities on the eve of the 2008 financial crisis and has encountered many challenges in the nearly two decades since. Perhaps the biggest of these was its failure to issue its shares during the 2021 tech boom.

At that time, eToro tried to list on Nasdaq through a SPAC merger at a valuation of $10.4 billion, significantly higher than the amount it has now received. Due to delays in completing the merger and changes in market conditions, the valuation was cut to $8.8 billion, and eventually canceled. In its most recent private financing round in 2023, eToro received a valuation of just $3.5 billion.

The bumps in the road continued even after the failed SPAC merger. In September 2024, the company was forced to pay $1.5 million to the US Securities and Exchange Commission (SEC), for allegedly operating as an unregistered broker and clearinghouse in the cryptocurrency sector.

At the same time, the company faced a lawsuit in August 2023 from the Australian regulator, claiming that it had not sufficiently screened its clients and caused losses to some 20,000 local investors who traded in CFDs - a financial instrument considered risky by many regulators worldwide.

To deal with these regulatory difficulties, eToro has established a risk management department operating under Hedva Ber, the former Supervisor of Banks at the Bank of Israel. The appointment is intended to reduce the company's friction with regulatory authorities in the countries where it operates, with the understanding that this is one of the most significant challenges it may face.

Published by Globes, Israel business news - en.globes.co.il - on May 15, 2025.

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