The eToro logo is seen during the 2021 Web Summit in Lisbon, Portugal.
Pedro Fiúza | Nurphoto | Getty Images
Stock brokerage platform eToro is getting interest from bankers and investors about a public market listing after its scrapped plans to go public via merger with a blank-check company, CEO Yoni Assia told CNBC.
“We definitely are eyeing the public markets,” Assia told CNBC in an exclusive interview last week. “I definitely see us becoming eventually a public company.”
“When is the ideal time to do that? We’re always evaluating the right opportunity at the right time and the right market,” he added.
Assia said that his brokerage company has built good relationships with exchanges, including the Nasdaq stock exchange.
EToro has already put the work in toward becoming a public company, he suggested, and the question of listing is more a matter of when, not if.
“It’s our business, right? Retail investors come to eToro to buy shares of a public company. So we’re happy to engage and build those relationships over time as we scale more.”
Figures shared by eToro with CNBC exclusively show that the firm recorded $630 million in revenue in 2023, more or less matching the $631 million in revenue it attracted in 2022.
But the company reported profitability for the first time in 2023, saying it reached $100 million in EBITDA (earnings before interest, tax, depreciation, and amortization).
The company did not provide a comparable profit figure for 2022.
EToro relies mainly on fees related to trading, like spreads on buy and sell orders, as well as fees for non-trading activities like money withdrawals and currency conversion. It also makes money from a membership product, called eToro Club. This is a premium membership model, and a costly one at that, with the lowest “silver” tier priced at $5,000.
EToro Club grants users a more personalized service based on their trading habits, as well as lower fees, discounts, and yields on crypto known as “staking” rewards.
EToro now has 35.5 million registered users, and over 3 million funded accounts. The company crossed $10 billion in total customer assets under administration in 2023, according to its financials.
Assia also disclosed that eToro has purchased a company called Deep, which focuses on content automation.
This is an area the company plans to focus on heavily in 2024.
Assia said eToro has been using AI heavily in its business, particularly in content and marketing. Around 80% of all of eToro’s marketing context, graphics, content, and localization integrates AI, he added.
AI is also serving a use case in investing and trading, according to Assia, with the company focusing heavily on integrating this into the product experience.
AI-related stocks, meanwhile, have generated a great deal of buzz among eToro’s userbase.
“If we think about AI, and what is the holy grail of AI for our customers, it’s obviously generating alpha in the markets,” Assia told CNBC.
AI has become a buzzy area for investors following the explosion of interest surrounding ChatGPT, the AI chatbot developed by Microsoft-backed company OpenAI.
Learnings from the SPAC process
EToro, which lets users buy and sell stocks via an online platform, was originally meant to go public through a combination with the special-purpose acquisition company, or SPAC, FinTech Acquisition Corp — which belonged to Bancorp founder Betsy Cohen.
A SPAC is effectively a listed shell company that’s set up with the aim of taking another target company public. The trend was immensely popular during a boom in such listings in 2020 and 2021 that saw companies from Virgin Orbit to Cazoo go public in much-hyped deals. The hype has since faded.
But eToro shelved these plans, which would have given the company a valuation of $8.8 billion.
Assia, who claims to have begun his trading journey from an early age, said eToro has learned a lot from the experience, which saw FinTech Acquisition Corp plummet and eventually dissolve and liquidate.
“We’ve learned a lot from the experience, looking at public markets in the U.S. and seeing sort of the bubble burst,” Assia told CNBC.
“We said 2022 is the year of education for customers to understand that the markets don’t always go up,” Assia said. “And I think 2023 is probably an educational year around the globe.”
“When everybody’s pessimistic is when markets actually do go up.”
Since its shelved listing plans, eToro in March 2023 raised $250 million at a $3.5 billion valuation in a deal backed by SoftBank Vision Fund 2, ION Investment Group, and Velvet Sea Ventures.
Then, in a deal reported exclusively by CNBC, eToro let early employees and investors sell $120 million worth of stock to existing shareholders in a secondary share sale.
That deal valued it slightly below $3.5 billion.
Financial technology companies have had a tough time over the last couple of years following a spike in interest rates, which have clobbered some risk assets. More recently, companies have seen a better time in the public markets, with shares of Affirm and Coinbase up 172% and 165%, respectively.
That hasn’t yet translated into private markets which, on the whole, remain depressed from levels reached during the height of the 2020 and 2021 fintech boom.
Assia noted that retail investors aren’t quite yet back in full in the stock market, and are still facing challenges given the higher cost of living.
However, he expects things to improve in 2024 with the expectation that interest rates will be lowered by the U.S. Federal Reserve.
Assia said eToro was focused heavily on product in 2023, prioritizing things like a better advanced trading experience and technical analysis features for its more hardcore user base.