Hook & thesis
eToro is not losing users — it's seeing a rotation in what those users trade. Recent metrics show funded accounts and assets under administration rising even as crypto volumes and average trade sizes compress. That pattern looks like product-mix churn, not platform abandonment, and it underpins a tactical long trade: the setup combines a reasonable valuation, confirmed profitability, and constructive technicals.
My view: buy eToro around current levels because the market is marking down a transition in revenue mix as if it were user flight. In reality, eToro's user base is growing (3.9M funded accounts in February) and AUA expanded 13% year-on-year to $17.6B, implying stickier engagement than the headline crypto weakness suggests. The trade targets a re-rating as commodity and self-custody capabilities scale, and as buybacks continue to push EPS higher.
What the company does and why it matters
eToro Group Ltd. operates the eToro trading platform, a retail-first multi-asset brokerage that brings trading tools and social features to a broad, global user base. The platform enables trading across stocks, commodities, CFDs and crypto. For investors, two things matter: scale of the user base and the monetization per active user. eToro can monetize through trading commissions, spreads and adjacent services (custody, tokenized products).
Why the market should care: eToro sits at the intersection of retail market structure and digital-asset custody rollouts. Its April acquisition of Zengo strengthens self-custodial crypto capabilities, which should stem the decline in crypto volume over time and protect exposure to the higher-margin crypto segment. Meanwhile, commodity trading already accounted for 60% of trading commissions in the recent quarter, which shows the company can shift its revenue mix toward other high-margin opportunities.
Proof points from the business
- Funding and scale: Funded accounts rose 10% YoY to 3.9M (reported in February metrics).
- Assets under Administration: AUA climbed 13% YoY to $17.6B.
- Activity: Capital Markets trades surged 81% YoY to 70.2M, even while invested amount per trade fell 35% — consistent with more frequent, smaller trades.
- Product mix: Crypto trades were down 36% YoY in the February release, but total money transfers grew 61% YoY to $1.3B, suggesting ongoing flow activity across asset classes.
- Balance-sheet-ish items: interest-earning assets rose 8% YoY to $6.9B, giving the company optionality to earn carry on balances.
Valuation framing
At the current market price the company is a roughly $3.24B market cap business (market cap $3,235,559,656.65). It is profitable on headline metrics: the trailing P/E is about 14.53 and the price-to-book is roughly 2.45. For a tech-enabled financial services franchise with positive earnings, a mid-teens P/E is reasonable and not demanding, especially given the company is executing on buybacks and business expansion.
Context matters: the stock traded as high as $67.12 (52-week high on 06/30/2025) and troughed at $24.74 (low on 02/05/2026). The more recent - roughly mid-$40s - price bracket reflects a repricing for product-mix risk rather than a structural user exodus, in my view. If eToro converts a portion of its new self-custody and commodity flow into durable revenue, the current multiple could expand toward prior levels.
Technical setup
- Price is above the short- and medium-term moving averages: SMA 10-day $38.74, SMA 20-day $38.97, SMA 50-day $38.77; current price $40.685 is trading above these averages.
- Momentum indicators are constructive: 9-day EMA $39.01, 21-day EMA $38.90; RSI sits at ~57.7 — bullish but not overbought.
- MACD shows bullish momentum: MACD line 0.122 vs signal 0.038 with a positive histogram, indicating upward momentum is intact.
Trade plan (actionable)
Direction: Long.
Entry price: $40.685.
Stop loss: $36.00.
Target: $55.00.
Horizon: mid term (45 trading days). I expect the trade to run through upcoming operational or product milestones (Zengo integration, quarter-over-quarter stabilization in crypto volumes, and continued evidence of buyback impact). A 45-trading-day window gives time for these developments to show in trading volume and sentiment while limiting exposure to longer-cycle macro risk.
Rationale for sizing and stop: Place the stop at $36.00 to sit below near-term support (the recent moving-average cluster in the high $30s) but tight enough to limit downside if the market re-assesses user attrition instead of rotation. The $55 target reflects a re-rating toward the mid-$50s — still below the prior 52-week peak — that would imply the market is giving credit for stabilization in crypto flows, successful Zengo integration and continued buyback-driven EPS support.
Catalysts that could push this trade forward
- Zengo integration and product announcements (post-acquisition): clearer self-custody offerings should restore crypto volumes over time and win back users who value on-chain control.
- Quarterly metric updates showing improvement in invested amount per trade or stabilization in crypto trades; recent Feb metrics showed AUA at $17.6B and funded accounts at 3.9M.
- Execution of capital-return programs: the company initiated a $150M share repurchase program in late 2025; visible buyback activity or acceleration would be EPS-accretive.
- Macro tailwinds for retail trading (risk-on environment): higher retail activity tends to lift volumes across equities, commodities and crypto, benefiting eToro’s multi-asset model.
Risks and counterarguments
Below I list the principal risks that could invalidate the trade and a short counterargument to the bullish thesis.
- Crypto winter persists: If crypto volumes remain depressed or decline further, the high-margin crypto revenue pool may not recover quickly, limiting total revenue even if account counts rise. Counterpoint: eToro is diversifying into commodities and custody, and commodities already made up 60% of trading commissions in the latest reported quarter.
- Execution risk on Zengo integration: Acquisitions that touch custody and on-chain infrastructure carry technical and regulatory integration risk. Poor integration could increase costs and churn. Counterpoint: Zengo serves over 2M users; pairing that tech with eToro’s distribution reduces time-to-market and should, over months, stabilize crypto flows.
- Valuation re-rating in a broader sell-off: A market-wide risk-off could compress multiples, and a profitable P/E of 14.5 won't shield the stock from cyclical pressure. Counterpoint: the buyback program and cash generation provide some defensive support versus pure growth stories without buybacks.
- Behavioral shift is permanent: If retail truly exits trading (lower frequency of trading rather than rotation), volume and monetization could structurally decline. Counterpoint: funded accounts and AUA growth argue against mass exit; metric trends point to rotation rather than wholesale abandonment.
- Short-pressure and headline-driven volatility: Short-volume spikes are visible in recent days (notably strong short-volume on 06/25 and 06/26), and short-interest days-to-cover has varied; an aggressive shorting campaign or negative press could force volatile drawdowns before fundamentals reassert. This is why the stop is protective and the target is set with a measured re-rating in mind.
Counterargument summary: Critics will say the decline in crypto volumes and the drop to a $24.74 low earlier this year prove the platform is fragile. That case assumes user abandonment rather than product-mix shift. Funded accounts and AUA trends favor the latter interpretation. Still, the integration of Zengo and a return of crypto activity are not guaranteed — which keeps this a tactical trade, not a 'set-and-forget' buy-and-hold recommendation.
What would change my mind
I would abandon the bullish thesis if we see any of the following:
- Consecutive monthly reports showing funded accounts and AUA contracting simultaneously for multiple periods (evidence of true user loss rather than rotation).
- Material execution failure or write-down tied to the Zengo transaction that impairs the balance sheet or signals integration missteps.
- Management guidance or metric revisions indicating persistent structural declines in monetization per user that cannot be offset by product diversification or buybacks.
Conclusion
eToro is a profitable, multi-asset retail platform trading at a reasonable multiple given its growth profile and buyback activity. The platform is seeing a shift in what users trade — from crypto into commodities and smaller-ticket trades — but the underlying user base and AUA are expanding. That pattern supports a tactical long: enter at $40.685, place a protective stop at $36.00, and aim for $55.00 over a mid-term window of 45 trading days. The trade balances fundamental evidence, recent product-safety moves (Zengo), and constructive technicals while acknowledging execution and market-risk vectors.
Key trade checklist before entry
- Price holding above the $38-$39 moving-average cluster and not closing below $36 on heavy volume.
- Near-term news flow confirming Zengo integration milestones or visible repurchase activity.
- Monthly metrics that show AUA and funded accounts are stable or improving.