The year’s biggest test of the IPO market will occur this week when retail broker eToro Group opens for trading Wednesday. eToro late Tuesday boosted the size of its IPO, which priced $2 above its expected price range. It ended up selling 11.92 million shares at $52 each, up from its prior plans to offer 10 million shares at $46 to $50.
eToro shares are slated to trade Wednesday on the Nasdaq under the ticker symbol ETOR. At $52 a share, eToro’s valuation is $4.2 billion. BlackRock is interested in buying up to $100 million in class A shares at the IPO price, the filing said. Goldman Sachs, Jefferies, UBS Investment Bank and Citigroup are lead underwriters on the deal.
An eToro spokeswoman declined to comment citing the IPO’s quiet period.
eToro’s listing comes at a pivotal time for the IPO market, which has been largely been dormant since 2021 when a record 397 companies went public. But that “Class of 2021” has largely performed badly in the broad market with only 17.4% trading above their IPO offer prices, according to Renaissance Capital, a provider of pre-IPO research and IPO-focused ETFs.
Even if eToro performs well, it likely won’t be enough to bring investors back to IPOs, said Matt Kennedy, senior IPO market strategist at Renaissance. “The IPO market isn’t going to reignite over just one or two deals. We’ll need to see several successfully price and trade up,” Kennedy told Fortune. He pointed to Hinge Health, a digital health company that is scheduled to trade next week, and other candidates like TV advertising software provider MNTN, Ategrity Specialty Insurance and crypto firm Circle that have filed but have yet to move forward with their processes.
“A successful eToro IPO would go a long way, but we’ll need to see several more in order for a meaningful pickup this summer,” Kennedy said.
Who is making money on eToro?
Etoro has had a bumpy ride to the public equity markets. The trading firm was one of several companies that tried to merge with a special purpose acquisition company in 2021, but the SEC never signed off on the deal and, in 2022, eToro ended up pulling the transaction. Earlier this year, eToro, along with other companies like Klarna and Stubhub, was on track to go public but had to put their deal on pause in April after President Donald Trump unveiled his “Liberation Day” tariffs which caused a major selloff in the broad market.
Founded in 2007, eToro offers a platform for customers to trade assets, including crypto, similar to U.S.-based trading platform Robinhood.
eToro is profitable, reporting $192.38 million in net income for the year ended Dec. 31, up from $15.25 million in 2023. On a quarterly basis, the company posted $59.1 million in profit for the quarter ended Dec. 31, compared to $16 million in profit the same time period in 2023.
Total revenue jumped to $12.6 billion in 2024 from $3.89 billion in 2023.
Of the 11.92 million shares offered in the IPO, 5.96 million are coming from eToro itself while the rest will come from existing shareholders. This includes Yoni Assia, eToro’s CEO and co-founder, who is offloading 549,635 Class A shares and will see his voting power drop to 9.34% after the offering. At $52 a share, Assia could make as much as $28.6 million from the sale. Ronen Assia, Yoni’s brother and an eToro co-founder, is selling 254,901 shares, which means he could make as much as $13.2 million while his voting power will drop to 3.42% after the IPO.
Spark Capital, the venture firm that led eToro’s $15 million round in 2012, currently owns the biggest stake in eToro. Spark is offering 670,257 shares and could make $34.85 million with the IPO. Its voting power is expected to drop to nearly 14% after the offering.
BRM Group, a venture firm from Tel Aviv, Israel, and Andalusian SPV, the investment firm from Jeffrey Kaplan, are also offering shares. (Kaplan is the ex-COO of hedge fund Appaloosa Management.) BRM is selling 419,518 Class A shares, which means they could reap $21.8 million, while their voting power is slated to drop to 8.71%. Andalusian could make $32 million from selling 618,999 shares, while its voting power is expected to fall to 8.44%.
This story was originally featured on Fortune.com
