eToro, the Israeli firm that offers its clients a trading platform, is continuing to offer packages of the company’s shares at a discount Globes reported. The discount is as much as 40% off the company’s trading price and the shares are being offered in secondary deals.
Investopedia explains that the term secondary offering refers to the sale of shares owned by an investor to the general public on the secondary market. So, the shares offered are ones that were previously sold by the company in an initial public offering (IPO). The proceeds from a secondary offering are paid to the stockholders who sell their shares rather than to the company. So, secondary offerings do not bring any new capital into the firm.
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More often than not, secondary offerings cause a firm’s stock price to go down as investors see the sale of the stock as a sign that the seller may feel the company’s value may go down. And in this case the stock is being offered at a considerable discount.
The news comes just a month after eToro sold off $120 million worth of shares in the company to certain early investors in a secondary share sell. Unfortunately, the deal did not bring the company any new capital as it was a secondary sale and it also left eTorro with just a $2.5 billion valuation, way down from the one time optimistic expectation of a valuation of up to $10 billion from a planned IPO that never materialized. This was just another sign of the times as the world markets continue to suffer through a financial crisis.
And, according to Globes, the new secondary offering leave eToro with just a $1.7 billion valuation.
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.
