Online trading company eToro going public over $ 10 billion with SPAC

Online trading company eToro going public over $ 10 billion with SPAC

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EToro, a broker with more than 20 million users, said on Tuesday that it is merging with FinTech Acquisition Corp. V, a publicly traded special purpose acquisition company or SPAC, in a $ 10.4 billion business. FinTech Acquisition Corp. shares V rose 45% with the news.

“Time will tell how that SPAC enthusiasm will develop, but as always, Wall Street milks each cow until it is dry and then finds out how to profit from the carcass,” said James Gowen, chief investment officer for small cap stocks at Spouting Rock Asset Management, in an email to CNN Business.

Banking the boom in social stock and bitcoin trading

Typically, after a SPAC goes public, it takes about 18 to 24 months to find a company to merge with and go public. If SPAC is unable to do so, it must dissolve and return the resources of its own IPO to investors.

For eToro, which was founded in 2007 in Israel and has offices in Cyprus, the United Kingdom, Australia and the United States, the merger with FinTech Acquisition Corp. it is a way to expand your business and create more brand awareness – especially since Robinhood is still dealing with the bad press he received for temporarily banning trading on GameStop on the platform.

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“We founded eToro with the vision of opening the global market so that everyone can trade and invest in a simple and transparent way,” said Yoni Assia, eToro’s CEO, in a statement. “Our users come to eToro to invest, but also to communicate; to automatically see, follow and copy successful investors from around the world.”

The company describes itself more as a social trading platform – and it is growing rapidly.

Revenue more than doubled in 2020 to $ 605 million, and the company said it added more than 5 million new registered users last year. EToro also said that monthly registrations for its platform grew to 1.2 million in January, compared to an average of 440,000 last year.

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The company also said that in 2020 eToro conducted more than 75 million deals, almost three times its monthly average of 27 million. And it’s betting heavily on bitcoins and other cryptocurrency trades, as well as stocks.

“In recent years, eToro has solidified its position as a leading online social trading platform outside the U.S., outlined its plans for the U.S. market and diversified its revenue streams,” said Betsy Cohen, President of FinTech Acquisition V, in a demonstration . “It is now at an inflection point for growth and we believe eToro is uniquely positioned to capitalize on this opportunity.”

Cohen has a history of creating SPACs for private companies in the financial services industry. Its FinTech IV SPAC is in the process of merging with investment bank Perella Weinberg Partners.
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Previous SPACs led by Cohen took financial technology company Paya Holdings and wire transfer service International Money Express (IMXI) public. As part of eToro’s business, major investors, including Softbank, Third Point, Fidelity and Wellington Management, are investing $ 650 million combined through a private placement in public stock, or PIPE.

Making eToro public now is an interesting time, as its rival, Robinhood, is still on track for its own IPO later this year.

Robinhood was last valued at $ 11.7 billion, according to data from research firm CB Insights. The company also said last month that it raised $ 3.4 billion to feed what it called record customer growth. It has about 13 million customers, according to its CEO’s testimony in Congress in February.

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