eToro shares (NASDAQ: ETOR) have tumbled to a fresh low of $40.15, a stark contrast to its IPO price of $52 and a high of $79.96, despite reporting robust earnings last time around, with a substantial 77% year-over-year increase in assets under administration (AUA).
This decline reflects a confluence of factors, including analyst downgrades, and rising expenses.
The stock's recent performance underscores significant downward pressure, trading at levels considerably below its initial valuation. This new low represents a substantial correction from its peak, prompting scrutiny from investors and analysts alike. The inability of strong AUA growth to offset negative sentiment highlights deeper concerns about the company's profitability and future prospects.
Several financial analysts have revised their price targets for eToro, reflecting a more cautious outlook. Jefferies lowered its price target from $80 to $63, maintaining a “Buy” rating, while Needham reduced its target to $76 from $80, also with a “Buy” rating.
Goldman Sachs decreased its price target from $78 to $68, keeping a “Buy” rating, and Citigroup reduced its target from $72 to $62, maintaining a “Neutral” rating. These adjustments reflect concerns over increased spending in marketing and research and development, mixed second-quarter results, and compressed EBITDA margins.
eToro's financial performance reveals a complex picture. In its first-quarter earnings report, the company announced earnings per share of 69 cents, surpassing expectations. However, the adjusted EBITDA margin contracted from 43% to 37%, and total expenses rose to $3.68 billion from $3.31 billion.
Marketing expenses surged over 60% to $61.2 million, raising questions about the sustainability of its growth trajectory and the impact on profitability.
eToro's market debut in May 2025 was initially met with enthusiasm, with shares surging 34% from the IPO price to an opening price of $69.69, achieving a valuation of $5.64 billion. This marked the largest U.S. exchange offering by an Israeli fintech since 2021.
Bull Case:
- Substantial 77% year-over-year increase in assets under administration (AUA).
- Reported robust earnings, with Q1 EPS of 69 cents surpassing expectations.
- Despite price target reductions, analysts at Jefferies, Needham, and Goldman Sachs maintain “Buy” ratings.
- Strong market debut with a 34% surge from IPO price, indicating initial investor enthusiasm.
Bear Case:
- Stock has fallen to a new low of $40.15, significantly below its IPO price and 52-week high.
- Multiple analysts have lowered their price targets due to concerns over spending and margins.
- Total expenses are rising, with marketing costs surging over 60%, impacting profitability.
- Adjusted EBITDA margin contracted from 43% to 37%.
The combination of these factors has created a challenging environment for eToro. While the company has demonstrated significant growth in user engagement and assets under administration, concerns over rising operational costs, regulatory constraints, and tempered analyst expectations have collectively influenced the recent decline in its stock price. The market will be watching closely to see how eToro navigates these challenges and whether it can regain market confidence in the weeks and months ahead.
Searching for the Perfect Broker?
Discover our top-recommended brokers for trading stocks, forex, cryptos, and beyond. Dive in and test their capabilities with complimentary demo accounts today!
- eToro Wide range of instruments available to trade – Read our Review
- Vantage High levels of account and deposit protection – Read our Review
- BlackBull 26,000+ Shares, Options, ETFs, Bonds, and other underlying assets – Read our Review
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
