eToro revives IPO plans after failed $10B SPAC merger

Israeli social trading network eToro is actively exploring options for a public market listing, according to CEO Yoni Assia in an exclusive interview with CNBC.

This news follows the company’s decision to cancel its initial public offering (IPO) plans through a merger with a special-purpose acquisition company (SPAC).

“We are certainly looking at the public markets,” Assia told CNBC, adding that the company’s long-term vision to become publicly traded. He noted the timing and market conditions as critical factors in deciding when to proceed with a public listing.

Assia highlighted eToro’s strong connections with top exchanges, including Nasdaq, suggesting that the company has been laying the groundwork for becoming a public entity. “The question is more about timing rather than possibility,” he remarked, indicating that eToro is well-prepared for a public debut.

Despite reporting a stable revenue of $630 million in 2023, similar to its 2022 figures, eToro confirmed its profitability with a strong EBITDA exceeding $100 million. The platform generates revenue primarily through trading fees and charges for various services such as withdrawals and currency conversions.

With a growing user base of 35.5 million registered users and over 3 million funded accounts, eToro continues to expand its presence in the financial market. The company recently acquired a firm specializing in content automation, named Deep, highlighting its focus on integrating artificial intelligence (AI) into its operations. AI plays a significant role in eToro’s marketing strategies and is increasingly important in investment and trading services.

The interest in AI among eToro’s users has surged, particularly following the widespread attention to AI technologies like ChatGPT. Assia believes that AI’s potential to enhance market performance is of great interest to eToro’s clientele.

Reflecting on the lessons learned from the abandoned SPAC merger, which had initially valued eToro at $10 billion, Assia views the experience as educational. Despite the setback, eToro raised $250 million in March 2023 at a valuation of $3.5 billion. The funding round was led by ION Group and Softbank’s Vision Fund 2, with participation from Velvet Sea Ventures and several other existing investors.

Looking ahead, Assia is optimistic about the financial technology sector’s recovery and anticipates an improvement in market conditions in 2024, potentially prompted by changes in interest rates by the U.S. Federal Reserve.

Previously, eToro planned to go public in 2021 through a merger with Betsy Cohen-backed blank-check company FinTech Acquisition Corp. However, due to a downturn in equity and cryptocurrency prices, investors reevaluated their exposure to technology companies, and retail brokerages faced a decline in trading activity.

Earlier in August, eToro repeatedly finalized a secondary share sale that took the company’s valuation down to $2.5 billion, roughly a quarter of the value it aimed to achieve in a Wall Street IPO two years ago.