Key facts
- eToro will acquire TradeZero for up to $231 million in cash and newly issued Class A common shares.
- The deal is expected to close in the first half of 2027, pending regulatory approval.
- TradeZero provides broker-dealer infrastructure and an active trader community.
- eToro's US crypto trading is restricted to Bitcoin, Ethereum, and Bitcoin Cash due to a 2021 SEC settlement.
- eToro's stock (ETOR) dropped over 10% on Tuesday after the acquisition announcement.
- The company beat second-quarter earnings estimates with EPS of $0.68.
eToro Group Ltd. announced Tuesday its agreement to acquire TradeZero, a US-focused online brokerage catering to active traders, for a sum potentially reaching $231 million. This strategic move is designed to accelerate eToro's expansion within the American equities market by integrating TradeZero's broker-dealer infrastructure, trading platforms, and engaged user base. The acquisition also provides eToro with an entry into the Canadian market.
TradeZero, established in 2015, offers commission-free trading of US stocks and options. eToro views this acquisition as a way to expedite the launch of new products for its US customers and to better compete with established brokers like Robinhood. The total consideration for the deal includes cash and up to 2.5 million newly issued Class A common shares of eToro, subject to customary adjustments. In the past twelve months, TradeZero reported approximately $80 million in revenue with a 81% gross margin.
The acquisition comes at a time when eToro's cryptocurrency offerings in the US remain limited, restricted to Bitcoin, Ethereum, and Bitcoin Cash following a 2021 settlement with the SEC. The company has been exploring alternative strategies, such as acquiring self-custody wallet firm Zengo and trialing tokenized stocks.
Despite the news, eToro's stock (ETOR) experienced a significant decline, falling over 10% on Tuesday to a low of $30.11. This sell-off occurred even as eToro surpassed second-quarter earnings expectations, reporting an EPS of $0.68 against a consensus of $0.61. The company noted that crypto revenue decreased by approximately 30% in the quarter, while equities led growth. eToro reported 4.28 million funded accounts in the second quarter, an 18% increase year-over-year. The TradeZero deal is anticipated to close in the first half of 2027.