- March 23, 2021
- Posted by: Trading
- Category: News
Like the online trading platform Robinhood Markets, which is considering a huge IPO at a valuation of at least $20 billion this year, eToro has also enjoyed a strong windfall over the past twelve months.
The spread of the coronavirus around the world has made 2020 a very difficult and challenging year. However, for many investors around the world, the past year has provided a tremendous opportunity to enjoy extraordinary returns in the financial markets – including alternative markets such as cryptocurrencies.
The influx of young people to digital investment platforms and the rise of cryptocurrencies added 5 million users to eToro in 2020. Competition between SPAC companies also inflate the value of start-ups regardless of their financial situation.
The FinTech company eToro, which has developed an investment management platform for private investors, is on its way to an IPO on the NASDAQ valued at $10 billion through SPAC. The offering is expected to kick off in the coming weeks.
eToro, founded by brothers Yoni and Ronen Asia, recorded a significant jump in revenue and profitability in the past year. eToro is believed to make hundreds of millions of dollars every year and record high profitability and gain an additional 5 million users in 2020 alone. Many refer to it as the “Israeli Robinhood”. In the past, there were estimates that the company would issue at a value of approximately $5 billion, but in recent months the company’s activity has risen significantly, so the expected value of the company has also increased. If an eToro IPO is successfully completed using the SPAC, it will be the highest IPO of an Israeli company ever concluded using this method.
The value of eToro has increased by a factor of 12.5 in less than three years: in 2018 it raised $100 million at a valuation of $800 million. The value jump looks even higher after institutional investors purchased shares of the Israeli company in 2020 at a valuation of $2.5 billion. The fierce competition that exists today between the hundreds of SPAC companies that are trying to bring worthy companies to the market intensifies value.
eToro was founded in 2007 by brothers Yoni Asia, who serves as CEO, and Ronen Asia, who recently retired from day-to-day operations at the company. eToro enables people to invest in a variety of assets in the markets – currencies, stocks, commodities, ETFs, Indices and cryptocurrencies. One of the advantages of eToro is the great ease with which it allows trading through it using artificial intelligence-based systems and machine learning.
The Israeli Robinhood
Like the online trading platform Robinhood Markets, which is considering a huge IPO at a valuation of at least $20 billion this year, eToro has also enjoyed a strong windfall over the past twelve months. The tailwind has come from two directions: first, the massive entry of young people into investments through platforms that brought in millions of investors in 2020. The other direction is its crypto activity.
This brought a wave of investors who wanted to benefit from the rise of Bitcoin and other cryptocurrencies. Unlike Robinhood, which is only active in the United States, eToro is active in the rest of the world including many countries in Europe and Asia. In Israel and the United States, the company does not have a permit to operate. eToro does not yet provide loans to investors and it records revenue in two main ways: the first is from trading commissions and the second from the various market makers that are using the platform.
Throughout its 14 years of operation, the company has raised approximately $162 million from a long line of institutional and private investors, some of whom have previously realized parts of their holdings at a handsome profit, and some have remained with the company since its inception. The biggest gainers in the expected IPO of eToro are members of the Asia family, the co-founders Yoni and Ronen and their father David, who together hold about 10% of the company. Other beneficiaries are the American venture capital fund Spark, which accompanied the company from the beginning. Other investors in the company include SBI Group, Korea Investment Partners and World Wide Invest china.
The company currently employs 1,100 people, 700 of them in Israel, and is expected to significantly increase its number of employees in 2021 after a massive recruitment of about 300 employees in 2020, half of them in Israel.
SPAC – Fast Track to the NASDAQ
According to conversations with Israeli high-tech entrepreneurs, almost every Israeli technology company currently receives an offer for an IPO via SPAC, regardless of its financial situation or suitability for the IPO.
By 2020, half of all New York issuances were by SPAC companies that raised a total of $80 billion. It is estimated that by 2021 the number will increase.
SPAC is a kind of stock exchange skeleton issued on the stock exchange with the intention of raising cash that will be used to purchase the activities of another company that will be merged into the company. Many companies prefer this route as it guarantees a certain value in the offering. Many companies that chose this path were companies with either no high income or no income at all.
Unlike the current influx into SPAC and the positive spirit it enjoys, at the beginning of SPAC in the 1980s, companies that took this route had much less positive reputations.