eToro, the Israeli startup that offers its clients a trading platform, has finally scrapped its planned IPO and will instead try to raise another $1 billion. The decision to do so came after the deadline initial public offering eToro’s SPAC merger with the Betsy Cohen-backed blank-check company FinTech Acquisition Corp V passed. And it also follows an almost yearlong drama in which the company was forced to lower expectations for the now failed initial public offering a number of times.
In more bad news for eToro, word is that the new fundraise will only leave the company with a $5 billion valuation, $6 billion if it is lucky. The company originally expected a valuation of well over $10 billion from the IPO. The company first delayed IPO plans back in September 2021. Then in January eToro was forced to lower its initial public offering expectation by 15%, from a previously expected valuation of as much as $10.4 billion down to just $8.8 billion. This was because the company had failed to meet the original deadline by the end of 2021.
The main reason for eToro’s failure and drop in value is probably the crash of the cryptocurrency market. Cryptos are a large part of the company’s business and revenue streams. Now, for obvious reasons, it has lost all of that. Even should Cryptos make a miraculous comeback someday, that would clearly be far off into the future.
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Founded in 2007 by CEO Yoni Assia and his brother Ronen Assia, eToro calls itself the world’s leading social trading network, with millions of registered users and an array of innovative trading and investment tools. The company declares its main goal is to remove barriers and make online trading and investing more accessible to the everyday user.
The eToro platform and app offer a variety of financial assets in which to trade and invest and is used by people in 140 countries.
In 2020 alone eToro doubled its revenue to 450 million, becoming profitable. It also added 5 million new users last year and just celebrated reaching the milestone number of 20 million users. The increase in revenue for its investments platform is credited by analysts to the Coronavirus crisis. This may be why it has doubled in expected value in the last three months.