Key Highlights
- eToro has reached an agreement to acquire TradeZero, a brokerage catering to active traders in the U.S., for up to $231 million.
- The transaction aims to enhance broker-dealer capabilities and provide access to the Canadian market, with a closing anticipated in the first half of 2027.
- The range of cryptocurrencies available to U.S. customers on eToro remains limited following a 2021 settlement with the SEC.
On Tuesday, eToro announced its decision to purchase TradeZero, a brokerage focused on active traders in the U.S., in a deal valued at up to $231 million. This acquisition, revealed by eToro Group Ltd., signifies an important step in the company's strategy to expand its presence in the American equity market.
Founded in 2015, TradeZero offers commission-free trading for U.S. stocks and options through its broker-dealer subsidiaries. eToro is particularly attracted to TradeZero's advanced trading technology, established broker-dealer framework, engaged trading community, and the potential to enter the Canadian market. TradeZero operates in the U.S., Canada, and other international markets.
eToro views this acquisition as a means to expedite the introduction of new products in the U.S. market. "This announcement represents a significant milestone in advancing our U.S. operations," stated eToro Co-Founder and CEO Yoni Assia. "This partnership enables us to launch new offerings for U.S. clients more swiftly and enhances our overall service. Together, we will accelerate innovation as we work towards creating a comprehensive global financial superapp for the next generation of users."
With this acquisition, eToro may be positioning itself to better compete with larger, more established brokerage firms. The company has gained recognition for allowing retail investors to trade cryptocurrencies and replicate other traders' strategies, but breaking into the U.S. equity market has proven more challenging. TradeZero provides the necessary licensed infrastructure and an active trading community that directly competes with platforms like Robinhood.
The deal, which could total up to $231 million, will include cash payments and the issuance of up to 2.5 million new Class A common shares, subject to standard adjustments. Over the past year, TradeZero has reported approximately $80 million in revenue with a gross margin of 81%.
This move into equities comes as eToro's cryptocurrency offerings for U.S. customers remain limited. Following a settlement with the SEC in 2021, American users can currently only trade Bitcoin, Ethereum, and Bitcoin Cash, with a 180-day period to sell any other assets. To navigate these restrictions, eToro has sought alternatives, such as acquiring a self-custody wallet provider, Zengo, for $70 million, and testing tokenized stocks on Ethereum for continuous trading.
Market Reaction
The announcement did not positively impact eToro's stock price. Shares, trading under the ticker ETOR, plummeted over 10% on Tuesday, reaching a low of $30.11, marking an approximate 10.5% decline for the day after a premarket drop of 4.4%. The company's market capitalization currently sits at around $3.33 billion.
This sell-off occurred despite eToro having exceeded second-quarter earnings expectations, reporting an EPS of $0.68, surpassing the consensus estimate of $0.61. The ongoing downturn in the cryptocurrency market may be influencing investor sentiment, as crypto-related revenue dropped approximately 30% during the quarter, even as equity trading showed growth. eToro is financing the TradeZero acquisition partially through the issuance of new shares, while also targeting a U.S. equities market where Robinhood is a significant competitor.
In the second quarter, eToro reported 4.28 million funded accounts, reflecting an 18% year-over-year increase, with a net contribution of $229 million. The company had previously valued its IPO at between $3.7 billion and $4 billion in 2025 and anticipates finalizing the TradeZero acquisition in the first half of 2027, pending regulatory approval.