Summary eToro (ETOR) is deeply oversold, trading at just ~4x FY26 adjusted EBITDA, despite solid fundamentals and a healthy U.S. expansion catalyst. Crypto trading weakness is a risk, but only 26% of net contribution margin comes from crypto; stock trading volumes are rising. U.S. equity market entry and CopyTrader launch drive growth, with funded accounts increasing by 30k since October, offsetting crypto and interest rate headwinds. I upgrade ETOR to strong buy ahead of Q4 earnings, seeing muted expectations and a compelling risk/reward profile at current valuation. As we prepare to head into a potentially volatile Q4 earnings season, my strategy for navigating the markets in 2026 remains consistent: avoid overly banking on the “obvious” momentum plays that shaped the market’s big gains in 2025, and look instead to value-oriented small and mid-cap stocks. Rebound stocks are particularly compelling, and in the case of brokerage platform eToro ( ETOR ), I think there are a lot of hidden upside catalysts that investors are missing in an overly pessimistic narrative surrounding the stock. Down ~40% since its IPO and now trading at single digit multiples of adjusted EBITDA, eToro is ripe for a rebound. Data by YCharts I last wrote a buy article on eToro in November, when the stock was trading at $37 per share. I’ll admit upfront that the timing of my buy call was mis-timed, and my position has lost value since then. That said, it’s difficult to ignore the fact that eToro’s selloff is not at all commensurate with its fundamental trends. Yes, the company has exposure to falling crypto prices - but overall it’s on a trajectory to keep growing, especially as it launches its brokerage products in the U.S. The next major catalyst for eToro is its Q4 earnings print, expected in mid to late February. In my view, eToro is a healthy buy before earnings, especially with expectations for the stock so muted. I’m raising my rating here to a strong buy , reflecting a high level of conviction I assign to very few stocks in my portfolio. Oversold on recent crypto trading metrics, which is in line with peers Let’s now dig into the meat of why eToro has been a persistent decliner recently. Like most other brokerage and crypto trading stocks, eToro reports trading metrics on its platform on a monthly basis. In December, the company reported trading stats for the month of November. The numbers sparked concern, especially around crypto. To some extent, crypto blowback should be no major surprise. First, crypto prices had been falling since midsummer as traders feared the so-called four year Bitcoin halving cycle; and second, the company was already known to face incredibly tough y/y compares against last year, when President Trump’s reelection to the White House brought fervent speculation for crypto deregulation and sent crypto market caps surging. In November, eToro recorded 5.0 million individual crypto trades, down -48% y/y in nominal trades. Average trades also fell -28% y/y to $264 per trade, which implies November dollar-based crypto trades of $1.32 billion, which is down -17% sequentially versus the month of October (5.0 million trades and $320 average trade, or $1.60 in nominal trade dollars volumes). eToro November trading stats (eToro November metrics release) Yes, waning crypto activity is certainly a headwind for eToro: I don’t at all mean to suggest that this isn’t a risk worth paying attention to. That said, there are two principal reasons why the recent selloff is overdone. The first is that crypto is actually a smaller slice of eToro’s net contribution margin. As a reminder, eToro reports the non-GAAP metric “net contribution margin” as a stand-in for revenue (which is a much higher figure). Net contribution margin essentially represents eToro’s market maker spread on trades, which is a truer reflection of the company’s “revenue” rather than gross receipts. As shown below, in the most recent quarter, eToro’s crypto net contribution of $56 million represented only 26%, or barely a quarter of overall net contribution margin. Unlike many brokerage peers, high-spread crypto trading is not the bread and butter of the platform’s monetization: but stock trading is. The number of stock trades grew 16% y/y to 46.3 million (partially offset by a smaller average trade, down -13% y/y - but still implying nominal y/y growth in trading volumes). eToro net contribution breakdown (eToro Q3 earnings deck) Here, eToro has a major catalyst underway: entry into U.S. markets (previously, eToro was mostly active in the UK, Western Europe, and Singapore). The company recently launched a service called CopyTrader in the U.S. , which as the name suggests allows investors to follow along with the trades of big-name investors. Unlike the sharp sequential and y/y declines in crypto, equities are showing promise and gaining share. Also, we note that total funded accounts grew to 3.79 million, implying 30k net adds since the end of October, with net new deposits hopefully helping to offset the net interest headwinds from falling Fed rates. The second reason not to be concerned is because eToro’s drop off in trading volumes is mirrored elsewhere in the market. The best compare here is brokerage giant Robinhood ( HOOD ), which surged in 2025 after being added to the S&P 500. As of the time of writing, Robinhood stock is up ~110% over the past year, while eToro has roughly halved. Yet when it comes to raw crypto performance, the two companies’ fortunes aren’t really widely divergent. Robinhood in November saw a -19% y/y decline in crypto trade activity, but that’s only because the company recently acquired Bitstamp to boost its crypto market share. Excluding Bitstamp, Robinhood-only crypto trading of $12.0 billion in November (roughly 10x eToro’s scale) declined -14% versus October, and down -66% y/y. Robinhood Nov crypto trades (Robinhood Nov trading metrics release) That’s in line with eToro’s November activity: but meanwhile, Robinhood’s net funded accounts in November actually fell by 0.2 million to 26.9 million (October to November basis), while as previously mentioned eToro picked up 30k new accounts. Robinhood Nov platform metrics (Robinhood Nov trading metrics release) Viewed from this lens, I fail to see why Robinhood deserved to climb to a near $100 billion market cap and gain ~2x over the past year, while eToro is struggling to retain barely $2 billion in market value. Deep valuation discount, risks and key takeaways At current share prices near $31, eToro trades at a market cap of just $2.62 billion. After we remove the $1.32 billion of cash, crypto assets, and short-term investments on its balance sheet against $143.9 million of cash owed to depositors, we’re left with an enterprise value of $1.44 billion. For next year FY26, Wall Street is expecting eToro to generate $934.3 million in net contribution (net revenue), or a modest 9% y/y growth rate. Again, there are puts and takes here: eToro benefits from a full year of US expansion, but will face headwinds from interest rate drops. Assuming a 36% adjusted EBITDA margin on that net contribution profile (flat to Q3 and YTD actual margins) gives us adjusted EBITDA of $336.3 million, positioning eToro’s valuation at an unheard-of 4.3x EV/FY26 adjusted EBITDA. Needless to say, this is an unheard of valuation multiple. Again the compare against the likes of Robinhood and Coinbase is apt here: eToro trades at a fraction of these stocks’ multiples: Data by YCharts Of course, there are risks here that we need to keep “eyes wide open” on. eToro is a relatively newer brokerage entrant in the U.S., and while services like CopyTrader may be appealing to retail investors, it may fail to earn the trust of older, higher wallet-share customers who prefer a more established brokerage. There’s also a chance that interest rate pressures and crypto market downside persist, which would be longer term headwinds to eToro’s net contribution margins. That said, at just ~4x EBITDA, it’s also difficult not to say that these risks aren’t already priced in. Buy here with confidence ahead of earnings: you’re getting a relatively safe entry point in an already profitable business that is unlocking new catalysts for growth.
