eToro buys US rival Gatsby to expand zero-fee trading offering

abdelaziz Fathi

Israeli social trading and multi-asset brokerage company eToro has secured the regulatory nod to acquire no-fee trading app Gatsby as it aims to expand its business in the US.

The takeover, which is around $50 million in a cash and common stock, was initially filled for approval by the US Financial Industry Regulatory Authority (Finra) back in December 2021.

Co-founded by Jeff Myers and Ryan Belanger-Saleh in 2018, Gatsby is a commission-free options and stock-trading app aimed at younger traders.

Gatsby focuses on a younger demographic to give people “a safe and fair platform to trade on without users having to worry about getting in over their heads or being shut out of names when volatility spikes.”

Gatsby builds upon two open source JavaScript projects for website and web app development. The app launched into iOS and Android in early 2020. Since then, it has seen the number of signups doubling on a yearly basis amid a spike in trade volume with cannabis and meme stocks ranking among its most popular assets.

“We’ve seen a seismic shift in the balance of power away from traditional finance institutions towards the retail investor. The internet has democratized financial information and a sea change has taken place, empowering more everyday investors – particularly Gen Z and Millennials – to trade and invest,” said Yoni Assia, eToro CEO and Co-Founder.

He continues: “These retail investors are looking for opportunities to generate returns in today’s bear market. Against this backdrop, we are incredibly excited to welcome the Gatsby team to the eToro family. We have a shared mission of empowering investors through simple, transparent investing tools. Scaling our U.S. business is a strategic focus for eToro and through Gatsby we can provide U.S. users with access to a safe and simple way to trade options, which we know are particularly attractive in challenging markets.”

The acquisition comes barely a month after eToro laid off 100 employees, half of them in Israel. This number represents around 6% of the company’s total workforce.

At the same time as announcing the cuts, eToro abandoned its plans to go public at an eye-catching $10 billion valuation after it canceled its SPAC deal with Betsy Cohen-backed blank-check firm. Worse still, the social investment work is reportedly in talks to close a private funding round of roughly $1 billion, but at only $5-6 billion valuation.

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