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eToro Sees Valuation Plummet by Two Thirds

eToro

eToro, the Israeli startup that offers its clients a trading platform, continues to see a drop in valuation, even as it raises new funds. This after being forced to cancel plans for an IPO last year.

The company completed a $250 million financing round that left the company with a valuation of $3.5 billion. But when eToro aspired to hold an IPO it expected to come away with as much as a $10 billion valuation. So, is this a sign of the times or something specific to the company?

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Probably both. eToro’s revenue plummeted by one third in 2022 from 2021, down from $972 million to $631 million.

But the company is looking for a turnaround in its fortunes in 2023. eToro Founder & CEO, Yoni Assia said, “As Q1 progresses, I’m hopeful that Yale Hirsch’s market theory ‘as goes January, so goes the year’ holds true. We’ve seen a positive start to the year with markets reacting favorably to ‘less bad’ news and retail trading hitting an all time high. Year to date, we have seen an improvement in total commissions and profitability compared with the previous quarter with higher engagement and trading activity from our users.”

Meron Shani, eToro CFO, also painted a rosy picture for the year ahead declaring eTorro’s underlying business is profitable, that its balance sheet is strong and that the company offers stability due, in part, to its diverse product offerings.

“At eToro we need no reminder that markets are cyclical,” said Shani. “The diversified nature of our multi-asset product offering ensured that commissions from equities and commodities partially offset the decrease in commissions from crypto assets in 2022. It’s also worth noting that we were not impacted by the liquidity concerns which plagued many in the crypto industry. “

Shani also pointed out that while revenues were down from 2021, they up 5% versus 2020. However, this is somewhat specious since 2020 was the year of the Covid crisis and 2022 saw the end of the crisis.

But Shani also pointed out that eTorro ended 2022 with over 2.8 million funded accounts – up 17% year over year.

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. eToro is a global community of more than 27 million registered users who share their investment strategies. The platform enables users to easily buy, hold and sell assets, monitor their portfolio in real time, and transact whenever they want.

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