eToro, the Israeli-founded social trading and multi-asset investment company that has since expanded its operations to London, is now aiming for an IPO in New York at a valuation of over $3.5 billion (2.7 billion Pound), reflecting a dynamic change in his company's strategic vision.
The financial world is abuzz with reports about eToro's intention to list on the Nasdaq exchange, nestled among the skyscrapers of New York City. What is the reason for that? It's simple but profound, as the US is the crown jewel of eToro's market dominance.
eToro is considering the Big Apple for its IPO journey
As CEO Yoni Assia explained, a US listing on Nasdaq would give eToro greater access to capital from American investors keen to invest in fintech companies.
Unlike London, the New York Stock Exchange has a larger pool of capital and investors interested in technology companies. For example, shares of Arm, a U.K.-based chipmaker that chose New York rather than London for its IPO last year, have more than doubled since listing. If Arm were listed in London, it would now be the fourth-largest company in the FTSE 100 with a market capitalization of $135.2 billion.
In contrast, the London stock market has recently struggled due to declining stock prices and investor outflows. Last year there were just 23 companies listed in London, 62% fewer than 2021, which saw a record 119 IPOs. An eToro IPO in London would give the city's stock exchanges a much-needed boost. Still, Assia noted that eToro is still “examining the right time” for an IPO and expects a higher valuation than $3.5 billion, the company’s most recent private market valuation.
The focus on stocks listed in the USA
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 may also trade UK stocks, but very few of our global clients would trade UK stocks. Something in the US market is creating a pool of high liquidity and keen awareness of the assets being traded in the US.
An initial public offering (IPO) on the Nasdaq or New York Stock Exchange (NYSE) would likely be more attractive to eToro's customer base and would support the company's growth strategy.
A London listing may seem logical given eToro's UK focus, but the advantages of New York, particularly the concentration of technology investors, appear to outweigh any geographical advantages. The largest pool of capital is the most important factor when 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 the IPO, its shares will be listed on an exchange, allowing investors to buy and sell them on an exchange. For existing eToro customers, this could be an opportunity to invest directly in a company whose platform they already use. But as CEO Yoni Assia points out, eToro needs to figure out how to give its predominantly European and Asian customer base access to a US IPO.
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