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Retail trading platform eToro is seeking a valuation of more than $3.5bn as it considers the US as a potential destination for a listing, despite the UK being its biggest market.
The Israel-based brokerage is weighing an initial public offering in either New York or London, its chief executive told the Financial Times, as retail trading activity on the platform surges to highs last seen during the “meme stock” frenzy of 2021.
Yoni Assia, founder and chief executive of eToro, said a US listing would give the company access to a broader range of investors than a presence on the UK market.
“Retail investors in the UK and Germany want to trade US stocks,” he said. “We see that UK clients might trade also UK shares, but very few of our global clients would trade UK shares. Something in the US market creates a pool of both deep liquidity and deep awareness for those assets that are trading in the US.”
However, Assia added that the European — and particularly UK — focus of its business might nevertheless push the company to plump for London. Roughly 70 per cent of eToro’s revenues come from Europe. Such a move would mark a boost for London, which is struggling to attract IPOs.
Even so, the possibility of a New York IPO underscores how Europe’s tech companies are being lured by the perceived higher valuations and deeper pool of capital available in the US.
Insurer Aspen, commodity broker Marex and gambling group Flutter are among the companies that have chosen to either IPO in New York or move their listings there away from London in recent months. The exodus has added to alarm among UK and EU policymakers, who are reforming their capital markets in an effort to keep more companies listed domestically.
Assia said he was “exploring the right timing” for eToro’s stock market debut and was expecting an increased valuation relative to the $3.5bn from its last funding round a year ago, when the platform raised $250mn from investors including SoftBank and market data company Ion Group.
eToro manages $11.3bn of customer assets across 3mn accounts, according to figures seen by the Financial Times.
The brokerage is benefiting from a surge in retail trading activity as US and European stock markets, and the price of bitcoin, have soared to record highs in recent weeks. Armchair investors can trade cryptocurrencies, stocks, currencies and commodities on eToro.
“We’re seeing levels of activity that we haven’t seen since 2021,” Assia said, referring to the retail trading mania that overtook stock markets during the coronavirus pandemic, as traders poured money into companies such as video game retailer GameStop and cinema chain AMC.
“So far 2024 starts to feel a bit like 2021,” Assia said. “Markets are at all-time highs, we’ve seen a significant increase in engagement in stock trading.”
The company’s valuation has plunged since its first attempt to go public in 2021 when it agreed a $10.4bn deal with a blank cheque company. Assia said the broker terminated the deal in 2022 after realising “the markets aren’t there”, as the boom in blank cheque vehicles known as Spacs imploded.
He added that eToro was unsure whether to follow rivals by allowing its customers to invest directly in its IPO. Robinhood rode the trading frenzy in 2021 by listing in New York and providing retail investors access to its IPO. Social media platform Reddit is also allowing some users to invest in its listing, which is expected later this month.
“Unlike Robinhood, all their customers are US-based [and] they did a US IPO, our customers are mostly European, UK, Asian,” Assia said. “To give access to US IPOs in European markets is a very different infrastructure.”
