eToro SPAC merger is getting delayed to 2022
Social investment platform, eToro expects its Wall Street debut to be delayed until 2022 because of regulatory hurdles for special purpose acquisition companies, Israeli news outlet Calcalist cited anonymous sources.
Per a recent report, eToro will not complete its SPAC merger with US SPAC Fintech Acquisition Corp by the end of 2021.
Going public through a blank-cheque company was originally scheduled for a Q3 closing at a massive $10.4 billion valuation. However, meeting investors to pitch a direct listing has hit a bump and the deadline was pushed back to the fourth quarter as the SPAC boom was already fading away.
“The company is in a process of transition into a public company by merging with the SPAC FinTech V and we are working with all the relevant bodies in order to complete the process as soon as possible,” the report reads.
The recent adjournment, however, could lead to the cancellation of the proposed merger with the prolific investor Betsy Cohen’s firm. More specifically, the private investment public equity (PIPE) investors are now entitled to cancel their participation in the deal, or demand a change in the pricing.
But until further notice, sources told Calcalist the deal will eventually go ahead at the original valuation alongside the original PIPE investment of $650 million. They added that eToro wanted to be transparent with the market at this point, but the firm still expects to sign with the investors on extension agreements.
eToro posts a Q3 loss of $100 million
Although the merger plans have yet to be completed, the share of the SPAC has suffered low demand compared to where it had been when eToro originally revealed its IPO plan. As of writing, the stock is trading below $10.0, down by a third off the peak it hit in March at $15.29.
In essence, a SPAC is a shell company that lists on a stock exchange with the purpose of buying another business and taking it public without consuming the time, costs and regulatory oversight required for traditional IPOs.
eToro, which lost $100 million in Q3 2021, is now competing with the likes of Robinhood, Vanguard, E-Trade in the US after it secured the membership of Financial Industry Regulatory Authority, Inc. (FINRA). Additionally, it allowed US customers to trade stocks at no cost in July, ramping up the intensity of the brokers’ fight to eliminate trading commissions.
In eToro’s existing markets, the company’s 24 million-plus users are able to trade and hold more than 1,500 markets, including stocks, bonds, cryptocurrencies, forex, commodities and more.