eToro aims at $5b IPO valuation

At the end of last week, Bloomberg reported that Israeli online trading platform eToro was considering an initial public offering in New York, and to that end had hired investment bank Goldman Sachs. Sources told Globes that the company is aiming for a $5 billion valuation.

This wouldn’t be the first time eToro has tried to get on the exchange. In the boom year of 2021, the company dreamed of a $10.4 billion SPAC merger, but that dream faded as the capital market slowed.

In March this year, it was reported that eToro was preparing to float, having raised funds at a valuation of $3.5 billion in 2023. The revised valuation is based on an expected rise in profits. Last year, eToro posted EBITDA of $107 million, after posting a loss of more than $40 million the year before. The company now expects to achieve greater profits this year, which will help it recruit institutional investors for its IPO scheduled for the second quarter of 2025.

There has been no comment from eToro, but in an article about the previous flotation attempt in March, the company’s founder and CEO, Yoni Asia, told The Financial Times: “So far, 2024 looks a bit like 2021. Markets at all- At all-time highs, we have seen a significant increase in participation in stock trading.”

eToro has received a boost from the cryptocurrency market, which is about to end an exceptional year. Last week, the price of Bitcoin surpassed $100,000 for the first time. It has since fallen slightly, but year to date, the leading cryptocurrency has posted a return of at least 125%.

eToro and Goldman Sachs were affected by the rise in trading platform stocks such as Coinbase, which benefited from the rise in cryptocurrencies. Coinbase’s stock price is up 119% so far this year, while Robinhood’s price is up 237%. Robinhood, eToro’s main competitor, trades at a multiple of 55 times EBITDA. If eToro were trading at the same multiple today, its market cap would have been nearly $6 billion on an EBITDA basis last year.

Last year, eToro reported revenue of $630 million, lower than in 2022, when revenue was $631 million, and nearly half of 2021’s revenue figure of $1.2 billion. However, the company is encouraged by the improvement in profitability, and plans to talk to the US Securities and Exchange Commission about allowing it to facilitate trading in cryptocurrencies on its platform, and expand its portfolio of products into ETFs and mutual funds. And even offer retirement plans. eToro recently acquired an Australian company called Spaceship, a pension investment management app, for AU$80 million. ($51 million), and has a partnership with the UK Pension Fund.

“Trump’s entry into the White House and the nomination of Paul Atkins, who has been an advisor to several cryptocurrency companies, as Chairman of the Securities and Exchange Commission, indicates that the US market is moving in a more liberal direction in terms of regulation.” says Adam Benayoun, co-founder of Collider Ventures, which invests in cryptocurrency and blockchain companies. “There will be a more lenient policy on mergers and acquisitions that will boost activity in this area next year, and many companies are gearing up on the starting line with the goal of floating. I don’t remember the period when the SEC chairman had a background in advising currency companies.” “Cryptocurrency, and now companies that have waited several years to float, such as Circle, Fireblocks, and eToro, are starting to prepare.”

Published by Globes, Israel Business News – en.globes.co.il – on December 9, 2024.

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