eToro goes public through a $5 Billion IPO
eToro, an Israeli-based brokerage is planning to go public through an IPO or SPAC merger valued at $5 billion by the second quarter of 2021. According to a report from the Israeli newspaper Calcalist, the broker is eyeing a listing in New York and is in talks with Goldman Sachs to make arrangements for the listing. Demands for eToro’s products and services have been soaring, especially with the increased retail demand since the beginning of the Coronavirus pandemic. Read our analysis on what investors should know about the company and the potential public listing.
- Reports indicate that eToro is in talks with Goldman Sachs about a potential IPO or SPAC merger to take the company public.
- The brokerage firm could be valued at $5 billion in an IPO that could come in the second quarter of 2021, according to Calcalist.
- Additionally, eToro is considering a possible merger with a special purpose acquisition company (SPAC) to expedite the listing process.
- But eToro has labelled the reports as ‘market rumours.’ In a statement to Benzinga, a company spokesperson said that “eToro does not comment on market rumours.”
What should investors know?
- eToro has developed a platform to manage investments for private investors, offering copy trading, the ability for an investor to automatically replicate the trades of another investor.
- The company was founded in 2007 as RetailFX, by brothers Ronen and Yoni Assia, with the latter currently serving as the company’s CEO.
- The company generates a significantly higher percentage of its revenue from foreign currency and cryptocurrency trading than its U.S. counterparts. eToro’s client base is largely non-U.S and Israeli customers can’t trade using the eToro platform, as it doesn’t have approval from the local regulator. eToro has been recognized by regulatory authorities in the U.K, Australia, and Cyprus, and has gained popularity in European and Asian countries.
- Demands for eToro’s products and services have been soaring, especially with the increased retail demand since the beginning of the Coronavirus pandemic as young investors turned to the stock market during the pandemic. The company’s revenue doubled to $500M and is profitable.
- Customers for the company have reached 17 million, with 5 million additional customers added in 2020, tripling its trade volume.
- Another positive sign for a potential deal to go public could be the company’s increased headcount. The company has over 1,100 employees now and is reportedly planning to hire hundreds more in 2021.
- eToro has raised over $200 million in funding. Starting with $1.7 million seed money, eToro closed five funding rounds, raising $162 million in total. The latest funding round in 2018 alone brought in $100 million with a valuation of $800 million.
- Moreover, eToro’s valuation on the secondary market skyrocketed recently, as another report revealed that a US-based institutional investor purchased at least $50 million worth eToro shares at a $2.5 billion valuation, thus putting a unicorn status on the start-up.
- Meanwhile, its rival Robinhood, which is also considering a 2021 IPO, has also seen an increase in users in 2020. The company has 15 million users and was completing 4.3 million daily transactions on average during the summer months. Robinhood reportedly has close to $1 billion in revenue and could be valued at $20 billion.
Which are the potential SPACs?
- eToro joins a long list of Israeli technology and fintech companies that are considering 2021 IPOs or SPAC deals.
- The GS Acquisition Holdings Corp II SPAC from Goldman Sachs has raised $700 million and did not specify a target area.
- Burgundy Technology Acquisition Corp is a SPAC that has said it could target an Israeli company.
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