eToro Agrees To Sell $120 Million In Shares At Discounted Valuation

Key Points:

• eToro facilitates a $120 million secondary stock sale to early employees and angel investors, reflecting investor interest in the firm.
• The termination of a proposed SPAC deal led to a valuation of $3.5 billion, down from the earlier sought-after $10 billion, but eToro raised $250 million from investors in a subsequent funding round.
• eToro’s strategic partnership with Twitter and regulatory approval as a virtual currency exchange in Spain further enhance its position in the global market.

In a move to provide liquidity for its early employees and angel investors, eToro, the multi-asset investment platform offering stocks, cryptocurrencies, and contracts for different transactions, conducted a secondary stock sale, according to a CNBC report.

The company allowed its existing investors to purchase shares from these stakeholders, raising a total of $120 million, according to sources familiar with the matter. This valuation is slightly below the $3.5 billion figure achieved in a previous Series A funding round earlier this year.

The secondary stock sale, characterized by the absence of newly issued shares and the consequent lack of net proceeds for the company, serves as a barometer of investor sentiment towards eToro’s shares. It comes as a significant development following the company’s decision to terminate a SPAC (Special Purpose Acquisition Company) transaction and its planned private placement financing in July of the previous year.

Previously, eToro had announced intentions to go public through a merger with a blank-check company, Fintech V, in a deal valued at $10 billion. However, due to fluctuations in equity and crypto prices, investor concerns about tech exposure, and a slump in trading activity experienced by retail brokerages, the deal fell through.

Undeterred, eToro managed to secure a $250 million investment from notable backers such as SoftBank Vision Fund 2, ION Investment Group, and Velvet Sea Ventures at a valuation of $3.5 billion. This valuation was significantly lower than what the company had sought in its initial attempt to go public via the SPAC route.

In recent times, eToro has been making waves in the financial industry with a string of noteworthy achievements. Among them was a partnership with Twitter (now known as X), enabling users of the social media platform to access stock and crypto trading by using “cashtags,” denoted by a dollar sign before a stock or asset’s ticker symbol.

Additionally, eToro received approval from the Bank of Spain to operate as a virtual currency exchange and electronic wallet custody service provider. This regulatory milestone underscores the company’s commitment to consumer protection and innovation. Spanish users can now access eToro’s diverse range of asset classes, investment tools, and educational resources, empowering them to grow their knowledge and wealth.

The recent secondary stock sale and ongoing developments highlight eToro’s resilience and strategic approach amid a rapidly evolving financial landscape. As the company continues to chart its path, it remains poised to make further strides in the investment industry, offering its users innovative and accessible opportunities in the world of finance.

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