eToro has secured $250 million in new funding months after its failed attempt to go public through a merger with the special purpose acquisition company (SPAC), FinTech Acquisition Corps. V. The funding brings eToro’s valuation to $3.5 billion, the Israeli social trading network disclosed on Tuesday in its latest financial results.
According to eToro, the funding originates from an Advance Investment Agreement (AIA) it entered in February 2021 as part of the proposed SPAC transaction. Participants in the new funding round include ION Group, SoftBank Vision Fund 2, Velvet Sea Ventures and a number of other existing investors.
Finance Magnates reports that eToro in March 2021 confirmed its plans to go public at a valuation of $10.4 billion through this merger with the blank-check company. However, the deal fell through in July last year after both companies failed to meet certain conditions stated in their agreement.
Furthermore, in November last year, FinTech Acquisition Corp. V announced that it was dissolving and liquidating the blank-check company after the deal failed, with plans to close down by December 9, 2022. The SPAC company, which was owned by Betsy Cohen, a well-known financier and the Founder of Jefferson Bank and The Bancorp, also said it will return the $250 million it collected from investors.
eToro’s Total Commissions Shrink Almost Half to $631M in 2022
Meanwhile, in the financial results released on Tuesday, eToro reported a decline of approximately 49% in generated commissions. Total commissions came in at $631 million last year, dropping significantly from the $1.23 billion generated at the end of 2021.
The shrinkage came despite a 17% year-over-year growth in eToro’s funded accounts which jumped to 2.8 million in 2022. This is up from 2.4 million in the prior year. However, compared to 2020, the total commissions grew by 5%.
According to eToro, while almost half (48%) of the commissions generated in 2022 came from equity trading, over a quarter (27%) were generated from commodities trading. In addition, the contribution of commissions from cryptocurrency trading dropped to 19%. Moreover, currencies accounted for the smallest commission, contributing to only 6% of eToro's purse.
The drop in commissions came in a year when the global cryptocurrency industry was hit by a number of chaotic events, including the collapse of Terra-LUNA and the cryptocurrency exchange, FTX which ensnared digital asset lenders such as Genesis.
However, Meron Shani, eToro’s Chief Financial Officer (CFO) says that the company’s “underlying business is profitable, and our balance is strong.” On top of that, Yoni Assia, eToro’s Founder and CEO, pointed out that the company year-to-date had seen an improvement in total commissions and profitability compared with the previous quarter “with higher engagement and trading activity from our users.”
“The diversified nature of our multi-asset product offering ensured that commissions from equities and commodities partially offset the decrease in commissions from crypto assets in 2022,” Shani explained.
“It’s also worth noting that we were not impacted by the liquidity concerns which plagued many in the crypto industry,” the CFO added.
