eToro's 73% Crypto Drop Masks $231M TradeZero Bid

Woofun AI reports that eToro is pivoting toward active US stock traders by acquiring TradeZero, a strategic move designed to offset a severe contraction in its core crypto business. This acquisition signals a deliberate shift away from reliance on digital assets as the platform seeks to stabilize its growth trajectory through traditional equity markets.

The catalyst for this pivot is evident in July's performance, where users executed only 1.4 million crypto trades, marking a 73% drop year-over-year. The average trade amount also halved to $182, reflecting diminished retail engagement. Financially, the second quarter revealed a complex picture: while cryptoasset revenue reached $1.346 billion, it was offset by $1.354 billion in cryptoasset cost of revenue. After accounting for $19.7 million in net trading income from cryptoasset derivatives, the net trading contribution from cryptoassets amounted to just $12.5 million, excluding blockchain rewards and staking. This figure represents pre-overhead contribution rather than segment profit, highlighting the thin margins in the current crypto environment.

Per Woofun AI, the acquisition details underscore the strategic value of TradeZero, with eToro agreeing to pay up to $231 million in consideration on Aug. 11. TradeZero generated approximately $80 million in revenue over the 12 months ended June 30 and achieved an 81% gross margin in the second quarter. The target provides critical broker-dealer infrastructure, proprietary trading tools, and an established community of active stock traders, offering eToro a faster route to launching new US products. The company expects the transaction to be accretive to adjusted earnings per share in the first year post-completion, with the deal slated to close in the first half of 2027, subject to regulatory approvals.

As of June 30, eToro held $1.2 billion in cash, cash equivalents, and short-term investments, providing ample liquidity for the integration. While regulatory clearance remains a prerequisite, the successful absorption of TradeZero could significantly reduce eToro's dependence on any single asset class. This marks a critical test of the company's ability to diversify beyond its crypto roots amid volatile market conditions.