eToro, the Israel-founded social trading and multi-asset investment company who have since expanded their operations to London, is now targeting an IPO in New York with a valuation of over $3.5bn (£2.7bn), reflecting a dynamic shift in their strategic vision.
The financial world is abuzz with reports of eToro's inclination to list on the Nasdaq exchange, nestled among the skyscrapers of New York City. What's the reason for this? It's simple but profound, as the US is the crown jewel of eToro's market dominance.
eToro Ponders the Big Apple for Its IPO Journey
As stated by CEO Yoni Assia, a US listing on the Nasdaq would give eToro greater access to capital from American investors eager to gain exposure to fintech companies.
Unlike London, the New York Stock Exchange has a deeper pool of capital and investors interested in technology companies. For instance, shares of Arm, a UK-based chipmaker that chose New York over London for its IPO last year, have more than doubled since listing. Had Arm listed in London, it would now be the fourth-largest company in the FTSE 100, with a market capitalisation of $135.2 billion.
In contrast, the stock market in London has recently struggled due to declining listings and investor outflows. Last year, only 23 firms were listed in London, down 62% from a record 119 IPOs in 2021. An eToro IPO in London would provide a much-needed boost to the city's exchanges. Nevertheless, Assia noted that eToro is still "exploring the right timing" for an IPO and expects a higher valuation than $3.5 billion, the company's most recent private market valuation.
The Focus on US-Listed Stocks
Assia explains that while 70% of eToro's revenue comes from Europe, many of the company's retail investors want to trade US stocks.
We see that UK clients might trade also UK shares, but very few of our global clients would trade UK shares. Something in the US market creates a pool of both deep liquidity and deep awareness for those assets that are trading in the US.
An initial public offering (IPO) on Nasdaq or the New York Stock Exchange (NYSE) would likely be more appealing to eToro's customer base and support the company's growth strategy.
A London listing may seem logical given eToro's UK focus, but New York's advantages, particularly its concentration of technology investors, seem to outweigh any geographical advantages. The deepest pool of capital is the most important factor in choosing a listing venue for a fast-growing fintech company like eToro, not proximity.
What an eToro IPO Could Mean for Investors
Should eToro proceed with its IPO, its shares will be listed on a stock exchange, allowing investors to buy and sell them on an exchange. This could be an opportunity for existing eToro customers to invest directly in a company whose platform they already use. But, as CEO Yoni Assia points out, eToro will need to determine how to enable its largely European and Asian customer base to access an IPO in the US.