Etoro has experienced a bad beating since its IPO - predominantly a result of its poor financial numbers, poor laggard to its peers (IBKR / HOOD which have undoubtedly done very well in drumming up attention).
What I am seeing here is the potential of a laggard reversing within short - mid-term horizon.
Below is a quick summary for its poor share performance by Mr AI.
1. Weaker Sequential Earnings and Profit Normalization
The company’s Q2 results, while beating headline expectations, showed a nearly 50% quarter-over-quarter drop in net profit and a sequential decline in adjusted EBITDA and net contribution. This signaled that the surge in trading seen around the IPO was not sustainable, raising concerns that strong Q2 results were more of a one-off event than a new baseline for growth.
2. Decline in Trading Activity and Revenue Dependency on Crypto
Trading volumes and activity “normalized” after April’s volatility, with total trades slipping year-over-year despite a brief revenue boost. Notably, over 90% of eToro’s revenue comes from crypto trading, making its performance highly sensitive to swings in crypto market sentiment—a risk that became clear as the retail trading boom cooled and Bitcoin’s new record high failed to drive a lasting spike in engagement.
3. Rising Expenses and Margin Pressure
Heavy marketing expenditure and increased investment in platform enhancements post-IPO have led to a surge in operating costs, calling into question future profitability margins even as revenues grow.
4. Analyst Downgrades and Lowered Price Targets
Several investment banks (Mizuho, KBW, Jefferies, UBS) cut eToro price targets and estimates, often citing weaker trading revenue per account and a lower overall take rate. These moves weighed further on investor sentiment, despite some analysts maintaining positive long-term views.
In summary, with so much negativity being priced into the stock, short interest wearing off, selling pressure cooling off and potential postive rerating ahead, there should be more upside potential than downside risk within the next 3 month.
Entry: ~$40
Exit:~$53
Holding Period: 3 month
Upside: 32.5%
APR: 207.7%
What I am seeing here is the potential of a laggard reversing within short - mid-term horizon.
Below is a quick summary for its poor share performance by Mr AI.
1. Weaker Sequential Earnings and Profit Normalization
The company’s Q2 results, while beating headline expectations, showed a nearly 50% quarter-over-quarter drop in net profit and a sequential decline in adjusted EBITDA and net contribution. This signaled that the surge in trading seen around the IPO was not sustainable, raising concerns that strong Q2 results were more of a one-off event than a new baseline for growth.
2. Decline in Trading Activity and Revenue Dependency on Crypto
Trading volumes and activity “normalized” after April’s volatility, with total trades slipping year-over-year despite a brief revenue boost. Notably, over 90% of eToro’s revenue comes from crypto trading, making its performance highly sensitive to swings in crypto market sentiment—a risk that became clear as the retail trading boom cooled and Bitcoin’s new record high failed to drive a lasting spike in engagement.
3. Rising Expenses and Margin Pressure
Heavy marketing expenditure and increased investment in platform enhancements post-IPO have led to a surge in operating costs, calling into question future profitability margins even as revenues grow.
4. Analyst Downgrades and Lowered Price Targets
Several investment banks (Mizuho, KBW, Jefferies, UBS) cut eToro price targets and estimates, often citing weaker trading revenue per account and a lower overall take rate. These moves weighed further on investor sentiment, despite some analysts maintaining positive long-term views.
In summary, with so much negativity being priced into the stock, short interest wearing off, selling pressure cooling off and potential postive rerating ahead, there should be more upside potential than downside risk within the next 3 month.
Entry: ~$40
Exit:~$53
Holding Period: 3 month
Upside: 32.5%
APR: 207.7%
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.