eToro stock may become available for investors through a much anticipated IPO, that was originally slated in the form of a SPAC before that model came under pressure.
In a significant development that epitomizes the current activity increase in retail trading, eToro is reportedly contemplating a stock exchange listing that could see the company valued at a substantial £2.72 billion, equivalent to $3.5 billion USD. An injection of enthusiasm amongst retail investors, partly driven by the COVID-19 pandemic’s impact on savings and investing behaviour, has led to a heightened valuation and a potential public offering in either London or New York.
eToro manages assets worth over £8.5 billion ($11.3 billion) for its global customer base exceeding three million. The platform facilitates a wide array of trading activities, spanning from traditional equity securities (including ASX stocks) to the burgeoning market of cryptocurrencies, in addition to foreign currencies and various commodities.
The firm’s founder and CEO, Yoni Assia, has underscored the advantages of a US public listing, citing better access to capital markets in comparison to those offered by the London Stock Exchange. This sentiment echoes a broader trend where UK-based companies are increasingly drawn to the potentially more lucrative valuations offered by US stock markets. In an interview with CNBC last month he was quoted as stating ‘We definitely are eyeing the public markets’.
Concurrently, the United Kingdom is looking inward to boost its capital markets. The recent UK budget proposed the introduction of a distinctly ‘British’ or ‘UK’ Individual Savings Account (ISA) with an augmented allowance of £5,000, specifically earmarked for investments in UK-listed companies. This move is conceived to incentivize a focus on domestic businesses, potentially re-balancing the interest towards UK equities. Despite the governmental efforts, UK investor sentiment has shown a substantial tilt towards American equities. Market research indicates a marked trend where UK investors are channelling funds across the Atlantic, with North American equity funds enjoying strong inflows in the previous month. This preference underlines the challenges the UK faces in retaining domestic investment.
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During the earlier SPAC pricing, eToro shares issued would have given the company a valuation of more than $8.8billion USD, but more recently in a private fundraise last year backed by SoftBank Vision Fund 2 amongst others, $250 million was raised at a valuation of $3.5billion. On a continued pathway to growth, and with a broadening market presence, we will wait and see what type of valuation eToro can expect when they finally hit the public markets and whether rumours of a similar mark to the last fundraise are accurate. What can be assured is that it will not be a quiet entry, with more than 35million registered users on the platform likely to take some interest.
As eToro evaluates the possibility of joining either the New York or London stock exchanges, its decision comes at a pivotal moment for both the platform and the broader retail trading landscape. The company’s path forward may not only reflect its own strategic aims but also contributes to the ongoing discourse regarding the attractiveness and competitiveness of global capital markets. For Australian investors, or Aussie users of eToro this move will not fundamentally change anything within the platform, but it may allow eToro to further invest in what is already a market leading stock trading app.
