eToro shares have not performed well since the IPO. As I write this, they’re trading at $31 – about 40% below the IPO price of $52.
It’s hard to know exactly why the share price has tanked. I think it’s probably related to a few different factors including:
* Competition: eToro operates in a very competitive industry and it’s up against some very powerful players. Earlier this month, analysts at Goldman Sachs downgraded the stock to ‘neutral’ on the back of competition concerns.
* Robinhood: Rival Robinhood is having a great deal of success right now. I feel like there’s a view in the market that this company is going to be the long-term winner with younger investors. Note that Robinhood has been expanding into Europe recently (eToro’s main market).
* Prediction markets: Prediction markets have taken off recently. eToro doesn’t offer this yet (it’s planning to launch this feature later in 2026).
* Crypto weakness: eToro is a major crypto trading platform. And crypto has been weak recently – Bitcoin is well off its highs. It’s worth noting that interest in Bitcoin has been declining. It seems young investors are focusing on other areas of the financial markets right now (e.g. prediction markets).
* Profitability: eToro’s profit margins are well below the industry average.
Personally, I wouldn’t short the stock. Because the valuation is quite low now. According to Stockopedia, analysts are looking for earnings per share of $2.69 this year. That puts the stock on a forward-looking P/E ratio of just 11.5. I don’t see a lot of downside at that valuation. But I could be wrong.
