eToro Said to Be in Talks With Goldman About Possible $5B IPO: Report
Israel-based eToro is in talks with Goldman Sachs about possibly leading the offering, which would be completed by the end of Q2 2021.
eToro is also considering the possibility of a merger with a special purpose acquisition company for the “purpose of accelerating entry into Wall Street trading,” the report said.
eToro has recruited 5 million new customers since the beginning of the year and is profitable, according to the report.
The company declined to comment on the report, Calcalist said.
The IPO is expected to take effect in the second quarter of 2021. Just earlier this month, the company, which developed an investment management platform, completed a $ 2.5 billion fundraiser. eToro has recruited 5 million new customers since the beginning of the year, doubling revenue to $ 500 million.
The company is in talks with Goldman Sachs Investment Bank, which is a candidate to lead the offering. According to plans, the IPO will be completed by the end of the second quarter of 2021. In doing so, eToro joins the airlift of Israeli technology companies that aim to issue on NASDAQ in the next six months, including Iron Source, Monday, Orcam, Pioneer, REE, Tabula and Outbrain. eToro is also considering the possibility of a merger with SPAC for the purpose of accelerating entry into Wall Street trading.
eToro, which has developed an investment management platform for private investors, has enjoyed a sharp jump in value since the outbreak of the plague. As revealed in Calcalist, earlier this month the company completed a $ 2.5 billion share sale round. This, after in 2018 it raised $ 800 million. The current round was a second-round IPO, in which shares of existing investors and company employees were sold for $ 50 million.
eToro was founded in 2007 by the brothers Ronen and Yoni Asia, who serves as the company’s CEO to this day. Ironically, customers from Israel cannot trade through eToro, as it does not have an operating license from the local regulator. Australia and Cyprus, which has made it popular in European and Asian countries.Beyond the windfall and demand for technology stocks in general, eToro enjoys positive sentiment, similar to Robinhood, as a mass trading platform.
The crisis of 2020 made young investors significant players in the stock market, with the trading share of the general public rising from historical levels of 15% ‑10% to more than 20%. Against this background, eToro enjoyed an unprecedented year, during which it recruited 5 million new users and its number of registered customers reaches 17 million. In addition, the volume of stock trading using the platform has tripled. The company’s revenues doubled to $ 500 million, with the company profitable.
eToro is following in the footsteps of Robinhood
Following the impressive tide, eToro recruited hundreds of employees this year, so that today it employs 1,100 people, 700 of them in Israel. The company plans to recruit hundreds more in 2021. Since its inception, eToro has raised about $ 200 million. Investors include venture capitalist Hemi Peres as well as Chinese investment bodies China Minsheng and Ping An.
Although the value to which eToro is aimed seems high on the face of it, if one compares it to the value of $ 11 billion, according to which Robinhood made its last private fundraiser, in August 2020, it already seems more reasonable. Robinhood has 15 million users and the number of transactions made through it has doubled to a daily average of 4.3 million per day during the summer months. Robinhood is also on its way to Wall Street, aiming for a value of $ 20 billion, with estimates estimated to be close to $ 1 billion by 2020. Like eToro, it also caters mainly to younger users.
The business model of the trading apps is based on minimum fees charged to the users, with the revenue generated by payments received from market makers, who execute the transactions. Robinhood also has a premium subscription, which allows, for a fee of $ 5 a month, to also have access to platform loans and investment portfolio management tools. In eToro, which started out as a kind of social network in the field of investments, no fee was charged for tracking the investment portfolios of other users.
EToro responded: “The company is not responding to market rumors”.
