Summary eToro Group is a fast-growing fintech innovating with tokenization, AI tools, and wealth products but remains heavily dependent on crypto trading. ETOR's Q2 2025 showed solid revenue growth and strong user gains, yet thin margins and profit volatility keep the stock from being a clear buy. Valuation is fair at 20x forward earnings, reflecting both growth potential and risks; holding is preferable to buying at current levels. Future upside depends on successful diversification beyond crypto, consistent user growth, and execution in wealth and banking products. I see eToro Group ( ETOR ) as a fast-growing fintech that is making good moves, but I do not think the stock is a clear buy right now. The company showed strong momentum in 2025, with net contribution up 26 percent from last year and assets under administration rising to $17.5 billion. Management is betting on tokenization, AI investing tools, and wealth products, all of which could fuel growth if customers take to them. The stock has had a rough ride. After climbing to $80 in June, it has dropped more than 40 percent and now trades just above its low for the year. Part of that pullback was the usual cooling-off after the IPO price , but it also reflects doubts about how steady earnings will be. Most of the company’s revenue still depends on crypto trading, which is unpredictable. I don’t think the story is broken, but at more than 20 times forward earnings, it is not cheap enough to jump in. For now, I think holding makes more sense than buying. Q2 2025 2025 Financial and Product Highlights (ETOR 6-K) What eToro is Building eToro began in 2006 and has grown into a platform where people can trade stocks, crypto, commodities, currencies, and options. What makes it different is its social features, like copy trading, and extras such as eToro Academy for education and eToro Money for payments and banking. Lately, the company has worked to expand beyond trading. In the second quarter of 2025, the company rolled out 24/5 U.S. equity trading, launched AI-based portfolios, introduced tokenized stocks, and rolled out retirement and savings products in France. Management is building across four areas: trading, investing, wealth, and neo-banking. If this works, it could smooth out the ups and downs of trading revenue. The company has also been buying its way into growth. Picking up Spaceship in Australia pushed funded accounts up 14 percent to 3.63 million. Choosing Singapore as a regional hub signals a push into Asia. In my view, this is smart positioning, though running so many initiatives across markets will not be easy. New Launches (Q2 2025 Investor Presentation) The Market Backdrop In my view, the industry feels crowded and is heavily shaped by investor mood. When markets are lively, volumes spike; when they are quiet, volumes fall. Robinhood ( HOOD ) already blends stocks, crypto, and basic cash features, and Coinbase ( COIN ) is starting to head in that direction too, with plans for tokenized equities and spending tools. For eToro, two shifts are especially important. The first is tokenization, which could change how people access assets. eToro has already launched tokenized stocks and added more crypto options, showing it wants to lead in this area. The second is wealth management, where the company has started retirement and savings products in Europe and recurring investment features in the UAE. These services bring steadier income that does not depend as much on trading hype. In my opinion, Coinbase is the strongest in crypto, Robinhood is more visible in U.S. retail trading, while eToro’s appeal lies in its global reach and social features. If it can get people to use its different services together, that could give it an edge. But diversification takes time and carries its own risks. Looking at the Numbers The second quarter of 2025 showed both progress and limits. Revenue was $2.09 billion, up from $1.85 billion a year ago. Net income came in at $30.2 million, about flat because of IPO costs. On an adjusted basis, net income was $54.2 million, up from $44.2 million, and adjusted EBITDA jumped 31 percent to $72 million. Cash stood at nearly $1 billion plus another $200 million in short-term investments. The balance sheet looks strong. Margins remain thin. Net margin was 1.4 percent, and adjusted EBITDA margin was about 3.4 percent. Revenue grew about 13 percent year over year, which highlights steady progress. Analysts see earnings per share rising from $2.19 in 2025 to $2.42 in 2026 and $2.85 in 2027. That would be solid progress, but the path depends heavily on how active crypto trading remains. The company is also planting seeds in other areas, like wealth products, tokenized assets, and AI-driven portfolios. These newer lines are still small today, yet over time, they could play a bigger role in supporting growth and reducing the reliance on crypto alone. Revenue (Q2 2025 Investor Presentation) How the Stock is Priced At $42.63, eToro is trading at about 6 times trailing earnings, but on forward numbers, the multiple jumps above 20. Price-to-book sits near 2.6. These numbers tell me the market is giving the company some credit for growth but not treating it like a sure thing. When I stack eToro up against its peers, the differences are pretty clear. Robinhood carries a forward P/E north of 70, while Coinbase is closer to 40. Both of those companies are much bigger, with market caps above $100 billion for Robinhood and above $80 billion for Coinbase, compared with less than $4 billion for eToro. Scale alone gives them more investor confidence. Profitability is the big gap. eToro’s net margin is barely above 1 percent, while Robinhood posts 50 percent and Coinbase 43 percent. That explains why investors are cautious. Even with solid revenue growth, thin margins make it hard to argue for a premium valuation. Return on equity is more encouraging at around 27 percent, which puts it in the same ballpark as peers. EPS growth has been strong, rising nearly 10 percent year-over-year in the most recent quarter. Net Margin (Author, Alpha Vantage) All told, I think the market has this one priced about right. A forward multiple above 20 does not look like a bargain when profits are so slim. To me, fair value falls between $40 and $55, which is exactly where the stock sits now. For the shares to climb higher, eToro will need to show that its earnings can hold up without depending so much on crypto’s ups and downs. What the Market Thinks Sentiment toward the stock feels uneasy. The IPO got attention, but the early enthusiasm faded, and the shares dropped into the low 40s. Investors want proof of stability before assigning a higher value. Even when the second-quarter numbers came in ahead of expectations, with adjusted EPS at $0.56 versus $0.51, the stock still slipped . That shows me investors are looking for consistency, not one-off beats. Recent headlines about tokenized stocks, AI portfolios, and a new Singapore hub are encouraging, but they also raise the bar for execution. On top of that, reports that eToro may pursue larger acquisitions with its $1 billion cash pile add both opportunity and risk. The overall market tone feels cautious. People want eToro to prove it can perform across different market conditions. Key Risks Crypto made up most of the company’s revenue in the latest quarter, so any downturn in prices or trading volumes would hit it hard. Regulation is another uncertainty. With operations in 75 countries, the company faces many sets of rules, and tokenization faces unclear regulation. Competition is tough, and costs to attract and keep users could rise. Finally, the push into wealth and banking is a big challenge, and it will take real investment and strong delivery. Together, these risks could quickly shift investor sentiment, especially since the valuation leaves little safety net. Looking Ahead Over the next year, I think the main story will still be crypto. Trading activity will rise or fall depending on how the market feels, and that will have a big impact on revenue. At the same time, eToro is rolling out new products like tokenized U.S. stocks, 24/5 equity trading, and AI portfolios. These updates help shape the brand and bring in attention, but I do not expect them to move the numbers in a major way right away. What I will be watching is whether funded accounts keep climbing at a double-digit pace, because steady user growth would show the platform is gaining ground even when crypto cools. Looking two to three years out, analyst forecasts put earnings per share at about $2.85 by 2027, up from $2.19 in 2025. That growth assumes eToro gets more out of its new offerings. Wealth products in Europe, recurring investments in the UAE, and acquisitions like Spaceship in Australia are all small steps toward building a more reliable income. If those products start generating meaningful cash flow, the business could become less sensitive to the ups and downs of crypto. The new hub in Singapore also gives eToro a way into Asian markets, but building trust there will take time. Over a longer horizon, eToro wants to be more than a trading app. If tokenized assets gain regulatory backing and customers adopt them, the company could establish itself as a leader in that space. Pair that with AI tools and wealth services, and you could see eToro turn into a fintech platform with multiple recurring revenue streams. The challenge is that execution matters more than the idea. Rolling out products is easy compared with getting people to use them in large numbers. If crypto stays the focus for too long, the diversification story may not stick. For me, the short run comes down to whether crypto trading stays active. In the middle years, I want to see if wealth products and new markets add real revenue. In the long term, the bigger question is whether eToro can break free from being viewed as mainly a crypto platform. The company has the chance, but investors will need to see proof before the stock is priced as anything more than a high-risk, high-reward play. Possible Paths If crypto weakens, trading volumes could shrink, user growth could slow, and earnings could fall below $1. That would make the current price look high. If conditions hold steady, steady growth in users and profits could keep the stock between $40 and $55. If tokenized assets, AI portfolios, and wealth offerings catch on while crypto stays strong, earnings could grow faster than expected and push the stock back toward $70 to $80. To me, the chances of these outcomes balance out, which is why holding feels like the best choice right now. Final Take I see eToro as a fintech with strong potential but real risks. The company is innovating quickly and growing its user base, but its dependence on crypto and its still-untested move into wealth and banking keep profits uneven. At more than 20 times forward earnings, the stock does not offer much margin of safety. For now, patience looks like the smarter move. It makes sense to wait, either for clear signs that new products are working or for the stock to fall to a cheaper level. Until then, holding is the approach I prefer.
