eToro's $231M TradeZero purchase sends shares down 10% despite a Q2 earnings beat. Crypto revenue fell 30% while equities led growth. Deal closes H1 2027.
Alpha Score of 40 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
eToro said Tuesday it will buy TradeZero, a U.S. online brokerage for active stock and options traders, for up to $231 million in cash and shares. Investors sold the stock anyway.
Shares of eToro Group Ltd. slid more than 10% on the day to $30.11, extending a 4.4% premarket decline. The company now carries a market capitalisation of roughly $3.33 billion, well below the $3.7–4 billion range it targeted in its 2025 IPO.
The selloff came even though eToro beat second-quarter estimates. EPS landed at $0.68, above the $0.61 consensus. Funded accounts reached 4.28 million, up 18% year-over-year. Net contribution was $229 million.
Crypto revenue dropped about 30% in the quarter, eToro said. Equities led growth. The TradeZero purchase is funded partly with up to 2.5 million new Class A common shares, diluting existing holders.
TradeZero, founded in 2015, runs commission-free U.S. stock and options execution through its own broker-dealer subsidiaries. It generated about $80 million in revenue over the last twelve months at 81% gross margins. The acquisition gives eToro licensed U.S. rails and a foothold in Canada.
"Today's announcement is an important step in building our US business," eToro CEO Yoni Assia said in a statement. "This combination gives us a faster path to launching new products for US customers and strengthens our offering."
The equities bet lands as eToro's U.S. crypto shelf remains thin. After a 2021 SEC settlement, American users can only trade Bitcoin, Ethereum and Bitcoin Cash, with a 180-day window to sell everything else. eToro has been patching around that limit by buying self-custody wallet firm Zengo for $70 million and trialing tokenized stocks on Ethereum for 24/7 settlement.
TradeZero brings the active-trader base that competes head-on with Robinhood in the U.S. equities market. The deal is expected to close in the first half of 2027, subject to regulatory approval.
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