eToro raises $250m at $3.5bn valuation after cancelling SPAC

eToro has scrapped its plans to go public and raised $250m at a $3.5bn valuation two years after announcing it was due to list through a $10bn SPAC, 

The funds came through an Advance Investment Agreement (AIA) which it entered into in February 2021 as part of the proposed SPAC transaction.

eToro secured the AIA — an agreement where investors pay for shares in advance that will be allocated at a later date — as a form of insurance in case the SPAC merger fell through, with investors including ION Group, SoftBank Vision Fund 2 and Velvet Sea Ventures.

The investment platform shared the news of the completed funding round, the first for the company since 2018, alongside its financial results for 2022, which saw total commissions of $631m and 2.8 million funded accounts as of the end of the year, up a bit from 2.4 million in 2021 but a big step up from its 1 million in 2020.

“As Q1 progresses, I’m hopeful that Yale Hirsch’s market theory ‘as goes January, so goes the year’ holds true. We’ve seen a positive start to the year with markets reacting favourably to ‘less bad’ news and retail trading hitting an all time high,”  eToro founder and CEO Yoni Assia said.

There has been an improvement in total commissions and profitability compared to the previous quarter, Assia said, with higher engagement and trading activity from users.

“Last year, retail investors endured a tumultuous year and for many their first ever bear market. Yet our latest quarterly Retail Investor Beat survey supports the activity we see on our platform — the retail investor is resilient,” Assia continued.

“While their short-term tactics may change in response to the market environment, they remain committed to their long term goals.”

While funded accounts were up 17 per cent year on year, total commissions for the year were down 49 per cent compared to 2021 ($631m v $1.23bn) and up by only 5 per cent on its 2020 revenue of $605m.

“At eToro we need no reminder that markets are cyclical. The diversified nature of our multi-asset product offering ensured that commissions from equities and commodities partially offset the decrease in commissions from cryptoassets in 2022,” eToro CFO Meron Shani said.

“It’s also worth noting that we were not impacted by the liquidity concerns which plagued many in the crypto industry. Our underlying business is profitable and our balance sheet is strong.”