The online investment platform eToro announced this Tuesday the purchase of TradeZero, a US stock trading company, for 231 million dollars, according to the company in a statement. The operation represents another step for the company, which has been listed on Nasdaq since last year, to diversify its business and expand its activity to the United States, a market with great potential due to the high dynamism of the financial markets.
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The Israeli-origin firm is exploring new markets and expanding the business to the commodities market to try to dilute the risk of cryptocurrencies, which at one time was very lucrative for it, but this year is weighing down its business. Bitcoin has lost almost 50% of its value in the last year.
The purchase of TradeZero is interpreted as an attempt to expand its retail client base and obtain a trading infrastructure to strengthen its presence in the US. It will pay for the operation with a combination of shares and cash. eToro will deliver up to 2.5 million newly issued Class A common shares in exchange for TradeZero, a US brokerage that serves active traders, with operations also in Canada and international markets. TradeZero generated revenues of nearly 80 million dollars over the last 12 months and recorded a gross margin of 81%.
The group founded by brothers Yoni and Dan Assia is accelerating its growth with the purchase of three companies in less than three months. In addition to TradeZero, it acquired Zengo, a crypto-asset custody platform, and Bit2C, a digital tool that connects finance with blockchain.
“Today’s announcement is an important step to build our business in the United States,” said Yoni Assia, co-founder and CEO of eToro. “This combination offers us a faster path to launch new products for US clients and strengthens our offering,” he added.
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The group, which has a portfolio of more than 40 million clients, announced the operation the same day it presented second-quarter results, reporting a net profit of 53 million dollars, representing a 77% year-on-year increase.
But the company’s shares plunged during the session. eToro’s shares lost more than 12% at mid-session. Investors expressed concern about the decline in revenues derived from cryptocurrency trading. The company’s total revenues were 1.593 billion in the second quarter, a 23% decrease compared to the same quarter of the previous year. The drop in revenue from cryptocurrency trading fell by 30%, affecting the company’s accounts.
Yoni Assia said a few months ago that he is confident the cryptocurrency market will recover soon. “We expect that later this year cryptocurrency will begin to recover and approach all-time highs, which will boost engagement with cryptocurrencies,” he said in an interview on the US financial news channel CNBC.
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