eToro’s $4B IPO: Too Pricey for Europe, a Bargain in the US?

After months of speculation, eToro has finally kicked off its public listing roadshow. The Israeli trading platform is targeting a valuation between $3.7 billion and $4 billion in its upcoming initial public offering (IPO). While that’s far below the $10.4 billion valuation it hoped for in its failed 2022 SPAC deal, it’s still above the $3.5 billion figure from its most recent funding round.

But is eToro’s current valuation high or low? And which listed brokers offer the fairest comparison?

US Valuation for a European Business

According to the updated F-1 filing yesterday (Monday), eToro plans to offer 10 million Class A shares at a price between $46 and $50. That puts the size of the IPO between $460 million and $500 million.

In 2024, the broker reported a net profit of $192 million. Based on the expected valuation, its price-to-earnings (P/E) ratio would range from 19.2 to 20.8.

Read more: eToro’s 2024 Profits Soared 13x, with Crypto Contributing 38% of Commission Income

That puts it in close range with US-based Robinhood, which trades at a P/E ratio above 27.5. On paper, this makes eToro’s offer seem more affordable. However, Robinhood currently has a market cap of $42.4 billion—ten times more than what eToro is targeting.

Both brokers also have a strong crypto connection. At eToro, 38 per cent of trading income came from cryptocurrencies. Robinhood also leaned heavily on crypto in recent quarters. But the American broker is now planning to reduce its reliance on digital assets as trading volumes fluctuate.

How It Stacks Up Against European Brokers

eToro now positions itself as a multi-asset platform and a fintech. But for years, its main focus was contracts for differences (CFDs). When compared to CFDs-heavy European peers, eToro’s valuation starts to look expensive.

IG Group, listed in London, has a market cap of £3.8 billion ($5.6 billion) and trades at a P/E ratio of 11.22. Plus500, another London-listed Israeli broker, is valued at £2.3 billion ($3.06 billion) with a P/E ratio of 12.2. CMC Markets trails behind with a £712 million ($950 million) market cap and a P/E ratio of 8.39.

Even Poland-listed XTB, which offers more than just CFDs, trades at a P/E of 13.26 and is worth PLN 9.9 billion ($2.6 billion).

To see our comprehensive Table click here and be directed to the full version of the article.

Despite this, eToro seems to see itself as more of a US-style trading platform, similar to Robinhood, than a European one. But the numbers tell a different story: 70 per cent of eToro’s 3.58 million funded accounts are from Europe and the UK. The Americas account for just 10 per cent. In comparison, Robinhood has 25.8 million funded users, mostly based in the United States.

eToro is expanding: eToro Plans to Launch Options Trading Outside the US in 2025

How Much Will eToro Raise—and Who Benefits?

Only half of the IPO shares will be newly issued. The rest will come from existing shareholders. This means eToro will raise around $230 million to $250 million in fresh capital. After deducting costs and commissions, the net amount will be about $217.7 million—or up to $285.6 million if underwriters fully exercise their stock options.

“The principal purposes of this offering are to increase our capitalisation and financial flexibility and to create a public market,” eToro stated. “We intend to use the net proceeds from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures.”

Interestingly, the broker also plans to use some of the IPO proceeds to “make acquisitions or investments”.

As for existing shareholders, eToro CEO Yoni Assia stands to make up to about $27.5 million by selling part of his stake in the public offering, while his brother, Ronen Assia, intends to make up to $12.75 million.

Other large shareholders—including Spark Capital, BRM Group (the Barkat family office), Andalusian, and CM Equities—are also expected to cash out tens of millions of dollars each.