Chapter 1

The eToro Setup

eToro is a founder-controlled, net-cash retail investment platform that listed on Nasdaq in May 2025 and now trades roughly a third below its offer price. It is genuinely profitable — $216 million of net income in 2025 [1] — but that profit rides retail-trading and crypto cycles, and the same platform reported a $215 million loss as recently as 2022 [2]. This chapter orients a cold reader and fixes the question the rest of the report answers.

What the business is

eToro operates a multi-asset "social investing" platform: retail users trade stocks, ETFs, cryptoassets, commodities and currencies, and — through its patented CopyTrader tool — can automatically mirror the portfolios of other users. The company was founded in 2007 by brothers Yoni and Ronen Assia, remains founder-led, and offered bitcoin trading in the EU as early as 2013 [3]. At the end of 2025 it served approximately 3.81 million Funded Accounts — users who have completed onboarding, deposited and traded — across 75 countries [4].

Sources: Funded Accounts and Net Contribution — FY2025 20-F [5] [6]; net cash derived from the FY2025 balance sheet [7].

The top line that isn't a top line

eToro's income statement reports $13.8 billion of "revenue" for 2025, of which $13.0 billion is "Revenue from cryptoassets" [8]. That figure is not what the business keeps. eToro books the full notional value of each crypto trade as revenue and nets an almost identical cost of revenue immediately below it. The measure that reflects what the platform actually earns from user activity is Net Contribution — total revenue and income less the cost of crypto revenue and margin interest expense — which was $868 million in 2025 [9].

The gap matters for a first-time reader: cryptoassets are about 94% of gross revenue but, by eToro's own component split, roughly a fifth of Net Contribution. Read the gross line and eToro looks like a crypto exchange; read Net Contribution and it looks like a diversified retail broker with a crypto business inside it. The rest of this report uses Net Contribution, not gross revenue, as the scale of the business.

Three years of earnings, and one cycle to remember

On Net Contribution, eToro has grown steadily — $557 million in 2023, $787 million in 2024, $868 million in 2025 [10]. Net income tells a more geared story. It was $15 million in 2023, $192 million in 2024 and $216 million in 2025 [11] — and a $215 million net loss in 2022, the year crypto markets collapsed [12].

Source: 2022 net loss of $215 million — Final Prospectus [13]; 2023–2025 — FY2025 20-F [14].

Two years separate a $215 million loss from a $216 million profit. That swing frames how to read eToro's earnings: net income is highly geared to Net Contribution, which in turn moves with retail trading appetite and, above all, with crypto. In 2023, on Net Contribution of $557 million, the company kept $15 million; in 2025, on $868 million, it kept $216 million. Most of the incremental Net Contribution dropped to the bottom line — which is the good news in an up-cycle and the warning in a down-cycle. A dedicated financials-and-estimates chapter should carry the full three-year statements and forward consensus; this chapter establishes only the shape.

Where Net Contribution comes from

eToro frames its diversification across five components. Equities, commodities and currencies is the largest and steadiest — $400 million in 2025. Net interest income, earned on user cash and margin balances, has grown every year to $217 million. Crypto trading is the swing factor: $56 million in 2023, $193 million in 2024, $155 million in 2025 [15].

Source: FY2025 20-F, Net Contribution and Components [16].

The diversification is real and it is eToro's central defense against the crypto-cycle read: a quarter can lean crypto or lean equities depending on where the volatility is. But the components are correlated to one common driver — retail engagement — and crypto is still the most volatile line within it. Crypto trading contribution swung from $95 million in the fourth quarter of 2024 to $26 million in the fourth quarter of 2025 [17]. Diversification softens the cycle; it does not remove it.

The balance sheet floor

For a reader who wants the chance of bankruptcy near zero, the balance sheet is the reassuring part of the story. At the end of 2025 eToro held $1.07 billion of cash and cash equivalents [18], plus roughly $0.2 billion of short-term investments, against no debt and total liabilities of about $0.4 billion. Shareholders' equity was roughly $1.39 billion. The company generated $313 million of free cash flow in 2025 and has never carried meaningful leverage.

Capital return has already started. The board authorized a $150 million buyback in 2025 and expanded it by $100 million in February 2026; by year-end 2025 the company had repurchased about $62 million of stock [19]. A net-cash, cash-generative platform buying back stock below its IPO price is a materially different risk profile from the highly leveraged brokers that have failed in past cycles.

Ownership, control and pay

eToro is founder-controlled through a dual-class structure. Class B shares carry ten votes each; pre-IPO holders, led by CEO and co-founder Yoni Assia, hold all of them and together control approximately 68% of the voting power [20]. Directors and executive officers as a group hold about 35% of the vote; regulatory rules cap any single holder — including Yoni Assia — at 9.99% of voting power, so control is collective rather than absolute [21].

The skin in the game is genuine: Yoni Assia beneficially owns about 7 million shares [22] — worth roughly a quarter of a billion dollars at the current price — and total compensation for all directors and named executives combined was just $7.5 million in 2025 [23]. Founder alignment cuts both ways for a minority investor — it concentrates decision-making and can block a takeover premium — and a dedicated management-and-ownership chapter should test it properly. For orientation: this is an owner-operator, not a hired-management, situation.

The price the market is putting on it

eToro priced its IPO at $52.00 per share on May 15, 2025, selling 13.7 million Class A shares and raising net proceeds of $378 million for the company [24]. The stock closed at $35.67 on July 31, 2026 — about 31% below the offer price, and well under the analyst mean target near $57.

Sources: price and consensus estimates — market data as reported; earnings and EBITDA — FY2025 20-F [25]; ratios derived at the July 31, 2026 close.

On roughly 82.9 million common shares the equity is worth about $3.0 billion; stripping out ~$1.28 billion of net cash leaves an enterprise value near $1.7 billion — about 5.4 times 2025 Adjusted EBITDA of $317 million and under 8 times net income [26]. Trailing P/E is in the mid-teens and the 2026 consensus multiple is around 13 times. Whatever else eToro is, it is not priced as a high flyer. The tension is that these are trough-cheap multiples on what may be peak-cycle earnings.

Tailwinds behind the platform

The structural case eToro leans on is the long rise of retail participation: retail investors accounted for about 52% of global assets under management in 2021, projected to exceed 61% by 2030, and younger cohorts start investing far earlier than prior generations [27]. The industry-tailwinds question — how much of eToro's growth is the rising tide versus share gain, and how durable the crypto-adoption leg is — deserves its own chapter; this one only registers that the platform has a real secular wind behind it.

The through-line

The question this report exists to answer: is eToro's post-2023 profitability — earned on a net-cash balance sheet under founder control, but geared to a Net Contribution that still rises and falls with retail trading and crypto activity — durable enough to make its low-teens earnings multiple, struck below the IPO price, a genuine margin of safety, or is 2025 a cycle high the market will re-rate lower when trading activity next contracts?

The evidence for the constructive read is on the page: a fortress balance sheet that all but removes bankruptcy risk, an owner-operator with a quarter-billion dollars of his own money at stake, diversification that has already let equities carry the platform when crypto cooled, and a valuation that does not demand heroic growth. The strongest fact against it is the 2022 loss — proof that this earnings stream can not merely slow but reverse. What would decide it is whether Net Contribution holds near current levels through the next crypto and retail-trading downturn, or falls back toward its 2023 base. The chapters that follow test the pieces of that question in turn.