eToro valuation halved in five months to $1.7 billion
eToro shares are reportedly being offered at a price of $60 per share in smaller secondary transactions, or $1.7 billion valuation, representing a decrease of around 35% to 40% compared to the secondary deal that took place last month.
The broker finalized a share sale in late July that took its valuation down to $2.5 billion, roughly a quarter of the value it aimed to achieve in a Wall Street IPO two years ago.
eToro allowed current and former employees, along with early investors, to sell shares worth $120 million to some of the broker’s existing investors.
The buyers of these shares are two of the company’s largest shareholders, who had participated in eToro’s previous funding round and now intend to increase their ownership in the company. eToro itself is not directly involved in the transaction and will not issue any new shares or receive proceeds from the share sale.
Responding to the recent news, a representative from eToro shared with FinanceFeeds that all share transactions are mandated to be officially recorded in the company’s registry. At this point, there is no knowledge within the company of any transactions taking place after the one that was announced in July.
“Every transaction in eToro shares is required to be registered in the company’s registry. The company is not aware of any transaction that was made after the transaction we announced last month.”
In March, eToro completed its last funding round, raising $250 million at a valuation of $3.5 billion. The funding round was led by ION Group and Softbank’s Vision Fund 2, with participation from Velvet Sea Ventures and several other existing investors.
The company abandoned its plans to go public even after it lowered its SPAC valuation down to $8.8 billion from the earlier planned $10.4 billion, as market conditions changed and SPACs face more headwind.
Previously, eToro planned to go public through a merger with Betsy Cohen-backed blank-check company FinTech Acquisition Corp in a deal that would have valued the company at more than $10 billion. However, due to a downturn in equity and cryptocurrency prices, investors reevaluated their exposure to technology companies, and retail brokerages faced a decline in trading activity.
Going public through a blank-cheque company was originally scheduled for a Q3 2021 closing. 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.
On a last-ditch attempt, eToro pushed back the completion of its reverse merger deal with the blank-check company backed by Betsy Cohen. Specifically, the deal deadline was extended from the earlier anticipated close on December 31, 2021 to June 30, 2022. Despite their ‘best efforts’, the parties haven’t satisfied the requisite closing conditions set forth in the original merger agreement, including eToro’s registration statement on Form F-4 to be effective.
