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Mergers & Acquisitions

Israeli trading platform eToro losing money due to SPAC expenses

eToro expects to complete its SPAC merger this quarter, valuing the firm at $10.4 billion.

Yoni Assia eToro - wikimedia
Yoni Assia, eToro

For the second quarter in a row, Israeli trading platform eToro posted a net loss due to high expenses and capital remuneration associated with its anticipated SPAC merger. eToro was supposed to merge with US SPAC FinTech Acquisition Corp. V previous quarter at a firm valuation of $10.4 billion, but the deal has been postponed.

The company’s net loss was $98.2 million, compared to a $7.6 million profit in the third quarter of 2020.

eToro reported $222 million in commissions in the third quarter of 2021, up 66 percent from the same period in 2020, and $176 million in net trading profits, up 56 percent from the same period in 2020.

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A non-cash charge of $60 million in stock-based compensation for eToro employees and $11 million in transaction costs connected to the business combination with FTCV contributed to the net loss. Adjusted EBITDA was negative $25 million in the third quarter of 2021, owing primarily to the company’s heavy investments in growth activities such as marketing.

Founded in 2007 by Yoni and Ronen Assia, and David Ring
eToro developed a platform where users can invest in a variety of equities, commodities, indices, and cryptocurrencies.

According to the terms of the SPAC merger, eToro will receive a $250 million cash injection from FinTech Acquisition Corp. V, as well as an additional $650 million in commitments for a common share private placement (PIPE) from leading investors such as Softbank Vision Fund 2, ION Investment Group, Wellington Management, Third Point LLC, and Fidelity Management & Research Company LLC.



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