Online trading firm eToro goes public in more than $ 10 billion SPAC deal

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EToro, a broker with more than 20 million users, said Tuesday it is merging with FinTech Acquisition Corp. V, a publicly traded specialty acquisition company, or SPAC, in a $ 10.4 billion deal. The shares of FinTech Acquisition Corp. V were up 45% on the news.

“Time will tell how this enthusiasm for SPAC plays out, but as always, Wall Street milks every cow until it’s dry and then thinks about how to take advantage of the carcass,” said James Gowen, chief investment officer of small cap stocks at Spouting Rock. Asset Management, in an email to CNN Business.

Banking on the boom in social trading for stocks and bitcoin

Once a SPAC goes public, it typically has about 18 to 24 months to find a company to merge with and disclose. If the SPAC cannot do this, it must dissolve and return the proceeds from its own IPO to investors.

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

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

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

Its revenue more than doubled to $ 605 million in 2020, and the company said it added more than 5 million new registered users last year. eToro also said monthly registrations for its platform rose to 1.2 million in January, from an average of 440,000 last year.

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The company also said that in 2020 eToro made more than 75 million transactions, almost three times the monthly average of 27 million. And it bets a lot on bitcoin and other cryptocurrency trades, as well as stocks.

“In recent years, eToro has cemented its position as the leading online social trading platform outside the US, outlined its plans for the US market and diversified its revenue streams,” said Betsy Cohen, president of FinTech Acquisition V, in a statement. “It is now at a turning point in growth and we believe eToro is in an exceptional position to take advantage of this opportunity.”

Cohen has a history of creating SPACs to target private financial services companies. Its FinTech IV SPAC is in the process of merging with investment bank Perella Weinberg Partners.
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Previous Cohen-led SPACs have acquired financial technology company Paya Holdings and bank transfers International Money Express TO WALK public. As part of the eToro deal, major investors including Softbank, Third Point, Fidelity and Wellington Management are jointly investing $ 650 million through a so-called private placement in public equity, or PIPE.

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

Robinhood was last estimated at $ 11.7 billion, according to data from research firm CB Insights. The company also said last month it raised $ 3.4 billion to fuel what it calls record customer growth. It has approximately 13 million customers, according to the CEO’s congressional testimony in February.

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