A number of factors indicate that the present is a beneficial time for eToro to go public, according to the company’s CEO.
Over the course of 2020, eToro sized up significantly, as Assia explained: “We’ve grown more than 147% year-over-year revenues,” he noted. This year rolled in with mainstream and crypto bull markets in full swing, in tandem with “the biggest discussion we’ve seen in human history around the intersection of social media and investment platforms” — all bubbling together to form what Assia labeled as “a perfect storm.” He added:
“We’re seeing an immense interest all around the world from people who want to participate in the global markets, which was our original vision from 2017 when we started our business of opening the global markets for everyone to trade and invest in a simple and transparent way.”
Bitcoin (BTC), as well as the rest of the crypto market, posted a standout year in 2020 after quickly recovering from a significant price decline around the same time as rising COVID-19 concerns in March 2020. Mainstream markets also rallied in 2020, but Bitcoin picked up steam late in the year, breaking its 2017 record high in December before continuing significantly higher. So far, 2021 has seen a continuation of the mainstream and crypto bull markets.
On March 16, eToro announced plans for taking its operation public on the Nasdaq through a special-purpose acquisition company, or SPAC. Essentially, this is a type of merger in which a private company combines with a specific, already-public company (a SPAC company), turning public in a less direct manner than an initial public offering.
“When your business grows faster than your expectations, it is always the right thing to do to make sure that you’re fully prepared to take the next stage of growth as a bigger company, as a public markets company,” Assia said. “We’re very excited about this next step of growth.”
Crypto exchange Coinbase plans on taking its business public through a direct listing on the Nasdaq stock exchange in April 2021. Alternatively, Diginex, a digital asset-centered entity, went public on the Nasdaq in October 2020 via a SPAC.
EToro has publicized its intent to buy and merge with a SPAC called Fintech V, Assia noted. “We will merge with that company, actually buying that company, and become the listed eToro,” he said. Formally known as Fintech Acquisition Corp V, the SPAC company currently trades on the Nasdaq under the ticker FTCV.
“When SPACs announce business combination agreements signed, the SPACs are already trading, so retail investors have the opportunity to invest in SPACs post-announcement under the SPAC ticker,” Assia said.
Essentially, this route of going public gives interested parties the chance to indirectly invest in a private company right away after it announces its intent to go public, even though it is not technically officially listed as a stock yet, based on Assia’s explanation. The investor would buy the involved SPAC’s stock, which would eventually become the stock of the private company. Generally speaking, if a company went public through an IPO, investors would have to wait for the private company’s stock to list and then buy its stock when it lists.
Related: Catalytic event or unbridled optimism? Coinbase approaches public listing
“During the next couple of months, as we go through the process of completing the merger agreement, we will basically become the listed company on Nasdaq,” Assia explained. Although Assia said his company did not yet have a new ticker name finalized at the time of the interview, eToro will not keep FTCV as its ticker. “We haven’t decided on it frankly,” he said. “We can’t share what we haven’t decided on it yet, like when you’re pregnant with a kid,” he explained with a laugh.
What will going public change for eToro compared to current operations? “I think for the majority of our day-to-day work will stay very much the same,” Assia said, noting customers, persistent technological advancement and products as areas on which eToro will maintain its attention. He added:
“As we conclude the deal, and we bring in the $650-million PIPE [private investment in public equity], as well as a $250-million SPAC into the company’s balance sheet at most, we’ll have a very strong balance sheet to consider potential acquisitions, a more aggressive geographical expansion — whether it’s expanding aggressively in the U.S., or in other markets.”
He concluded that going public while having a balance sheet of over $1 billion “will enable us to be even more aggressive as we think of the growth of eToro.”
In recent months, talk of crypto companies going public has made a number of headlines. Crypto and financial asset trading platform eToro is one of the latest crypto-involved companies looking to go public. The outfit’s CEO, Yoni Assia, recently explained eToro’s rationale behind the move in an interview with Cointelegraph.