eToro IPO: Everything you need to know about the eToro SPAC

Online social trading firm eToro announced its intention to go public in Q3 2020 via a SPAC deal – an increasingly popular way of listing shares. Discover everything you should know about eToro before it goes public, including the IPO date and how you can trade eToro stock.

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What is eToro?

eToro is an online stockbroker that enables its users to trade shares, ETFs and cryptocurrencies. It was founded in 2007 in Israel, later launching its European offering in 2013, and US offering in 2019. It now operates in over 140 countries.

eToro provides users with a managed portfolio via their social trading features – the idea that people can copy strategies off other, more experience traders. This helps less experienced traders get their foot in the door with financial markets.

When is the eToro IPO?

eToro is expected to IPO via a special purpose acquisition company (SPAC) via a special purpose acquisition company (SPAC) deal in the first half of 2022. The deal with FinTech Acquisition Corp V (FTCV) was expected to be completed by December 31 2021, but the deadline has now been extended to June 30 2022. Following the IPO, eToro will operate as eToro Group Ltd.

A SPAC is essentially a reverse merger – it’s becoming a popular way of holding an IPO as it faces less regulation and scrutiny than traditional IPOs. A SPAC merger sets a fixed valuation, which can result in volatility on the first trading day, and unlike normal IPOs, there is no six-month lock-up period before shareholders can sell their shares. While SPAC deals are often seen as less credible than normal IPOs, the eToro deal has already received backing from ION Investment Group, Softbank, Fidelity Management and Research Co, and Wellington Management.

How much is eToro worth?

After the merger, eToro and FTCV are expected to have a combined value of $8.8 billion. This guidance was downgraded in 2022, from the initial $10.4 billion valuation, due to less favourable market conditions. 

Share of the SPAC have already suffered due to low demand, especially when compared to the boost it received after eToro originally revealed its IPO plan. FTCV shares were trading at $9.9 on January 14, down from the peak it hit in March 2021 at $15.29.

By the end of 2020, eToro was rumoured to have been valued at $2.5 billion following an undisclosed sale of shares to a US-based firm. This was a big step up from the company’s last funding round in 2018, which valued eToro at £800 million.

Is eToro profitable?

eToro has yet to reveal its profitability. But the investment service was estimated to have $800 million in cash, and a revenue of $605 million in 2020. While many businesses have suffered due to Covid-19, online trading platforms such as eToro have seen increasing profits caused by volatility on financial markets.

How does eToro make money?

The main way eToro makes money is through trading and non-trading fees charged to users. These include spreads, withdrawal fees, inactivity fees and currency conversion charges. As the number of trades being carried out on the eToro platform has increased dramatically – from roughly 27 million in January 2020 to around 75 million in January 2021 – the company has seen a dramatic boost to its income.

eToro also makes money through what is known as a market maker model, which is very typical among brokers and trading providers. When you open a trade, eToro takes the opposite position on its platform – so if you buy Apple stock, it will match your trade exactly with an order to sell Apple. This means eToro’s exposure to your trades is hedged. If the order book is unbalanced, the broker will hedge using third party liquidity providers.

What is eToro’s business model?

eToro’s business model is based on attracting individual traders who don’t have enough capital to meet other brokers’ requirements. An eToro user will only need $50 in their account to start trading.

These traders can then use thes ‘social investment network’ products OpenBook and WebTrader to follow other investors to copy their trades and use their strategies. This method of trading is often known as ‘social trading’ – it’s more common among beginner traders, who don’t have the time or experience to identify opportunities in the traditional way.

The top traders can earn a monthly salary, commission and cheaper transaction costs for their own trades.

Who are eToro’s competitors?

eToro’s most direct competitor is Robinhood, another trading and investment app focused on the novice trader. Robinhood went public in 2021 but has since been the subject of much criticism, so it will be interesting to see what happens when eToro is subject to market forces.

According to eToro’s press release in March 2021, it has 20 million users – compared to Robinhood’s 13 million.

Who owns eToro?

eToro is owned by its founders Yoni Assia – who is currently chief executive officer – his brother Ronen Assia, the company’s executive director, and their friend David Ring. 

Other current owners of eToro shares include Bracket Capital, China Minsheng Financial Holdings, Korea Investment Partners, Digital Currency Group, SoftBank, and Besty Cohen – who is the CEO of the investment group eToro is using to complete their SPAC deal.

Who are the directors of eToro?

Name

Position

Yoni Assia

Chief Executive Officer and Founder

Ronen Assia

Founder and Executive Director

Shalom Berkovitz

CFO and Deputy CEO

Avi Sela

Chief Operation Officer

Tuval Chomut

Chief Solutions Officer

Jonathan Dayan

VP Trading

Tal Ben-Simon

VP Product

Israel Kalush

VP Engineering

Nir Szmulewicz

VP Marketing

Etay Cohen

VP Customer Facing

Doron Rosenblum

VP Business Solutions

Miri Kedem

VP Human Resources

Elad Lavi

VP Corporate Development

Debbie Kahal

General Counsel

Guy Hirsch

Managing Director for US

Robert Francis

Managing Director for Australia

Eddy Shalev

Board Member

Santo Politi

Board Member

Avner Stepak

Board Member

How to trade eToro shares

When eToro lists, you’ll be able to trade its shares in the same way you would any other publicly-traded company on the stock market.

You can trade stocks with Forex.com via CFDs, with spreads from 1pt. Follow these easy steps to start trading:

  1. Open a Forex.com account, or log in if you’re already a customer
  2. Search for the company you want to trade in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade

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