eToro (NASDAQ:ETOR) Stock Slips 8.3% After Q2 Beat - Buy The Dip

NASDAQ:ETOR Suffers 8.3% Pullback Despite Outperforming Q2 Earnings

NASDAQ:ETOR delivered a strong second quarter with earnings and revenue ahead of expectations, yet the stock closed sharply lower at $50.74, down 8.3% on the day and as much as 9.6% intraday. The selloff followed a rally toward $59 earlier in the week but was fueled by management’s acknowledgment that April’s spike in trading activity, triggered by tariff-related market volatility, had normalized by July.

The Q2 report showed adjusted EPS of $0.56, topping estimates by $0.06, and revenue of $217.15 million, beating the $194.11 million forecast. Net contribution rose 26% year-over-year to $210 million, while adjusted net income climbed 23% to $54.2 million. On a GAAP basis, net income reached $30.19 million, slightly below the $30.6 million recorded last year.

Robust Asset Growth Across Equities, Crypto, and Cash

Assets under administration (AUA) surged to $17.5 billion, up 54% from a year ago and 18% from Q1’s $14.8 billion. Funded accounts grew to 3.63 million, up 14% YoY and 1.4% sequentially, aided by organic expansion and the acquisition of Australia’s Spaceship app. Equities under administration rose 23% quarter-over-quarter to $7.9 billion, crypto assets increased 16%, and cash holdings reached $3.1 billion, up 11%. Interest-earning assets saw a marginal dip to $6.3 billion from $6.4 billion in Q1.

Strategic Expansion Into Tokenized Assets and AI Portfolios

The quarter marked a significant push toward next-generation investing. eToro rolled out 24/5 trading for 100 U.S.-listed stocks and launched tokenized equities, advancing its vision of a fully tokenized market. Global crypto coverage expanded to over 130 assets, and the company introduced AI-powered Alpha Portfolios, combining proprietary retail trading data with external sources to deliver curated strategies.

Additional expansion included new French retirement and life insurance products, recurring investment options in the UAE, and a partnership with Franklin Templeton for target-date portfolios. These moves position ETOR to capture both long-term savings flows and high-frequency trading activity.

Valuation Discount to Peers May Present Contrarian Upside

ETOR’s enterprise value sits near $4.8 billion with trailing 12-month revenue of $12.6 billion, yielding an EV/revenue multiple of ~0.4x, far below Robinhood’s valuation. Its EV/EBITDA is around 14x compared to Robinhood’s 54x, reflecting both lower margins and the market’s discounting of its model. Active users remain at 3.5 million versus 38 million registered, signaling untapped monetization potential.

Insider transaction records reveal no large-scale selling, suggesting the recent pullback is sentiment-driven rather than rooted in weakening fundamentals. The social trading platform continues to show high user retention while moving into staking, futures, and options trading, expanding its product breadth.

Regulatory and Cyclical Risks Remain Key Watchpoints

The company faces ongoing regulatory headwinds. In 2024, it paid $1.5 million to U.S. regulators for operating as an unregistered crypto broker and €1.3 million in the EU for misleading commission-free claims that omitted FX costs. The Australian Securities and Investments Commission also acted against eToro over CFD product entry testing, contributing to a loss of nearly 20,000 clients between 2021–2023.

Moreover, ETOR’s earnings remain highly sensitive to retail trading cycles. Prolonged market downturns could dampen activity across equities, crypto, and derivatives. Perception risks also linger over whether its “top traders” feature prioritizes user returns or platform profitability.

Growth Catalysts and Institutional Inroads

A CMS license from Singapore’s MAS grants access to over 20 regional exchanges in a wealth-dense market. Even modest penetration could add high-value accounts with above-average assets. AI integration in portfolio tools is expected to lift ARPU and improve retention, while tokenized assets could appeal to both crypto-native and traditional investors.

Analyst sentiment remains constructive — Jefferies and Mizuho rate the stock Buy with targets at $80, and Canaccord Genuity holds a Buy at $78, implying 45–50% upside from $55.30. With $1.2 billion in cash and a $250 million undrawn credit facility, ETOR has the liquidity to fund expansion and withstand market or regulatory turbulence.

Verdict: Buy

At $50.74, NASDAQ:ETOR trades more than 14% below last week’s high of $59.20 and nearly 36% off its 2024 peak above $79, despite delivering earnings and revenue beats in Q2. This sharp pullback, triggered by the normalization of April’s tariff-driven trading spike, has created a rare entry point for investors who can look beyond short-term sentiment swings.

The platform’s $17.5 billion in assets under administration, accelerating adoption of tokenized equities, and global product expansion provide structural growth drivers that remain unaffected by the recent selloff. Compared to peers like Robinhood, ETOR’s EV/revenue multiple of ~0.4x and EV/EBITDA of ~14x imply the market is undervaluing its long-term monetization potential.

If ETOR simply retraces to the consensus analyst target range of $78–$80, investors at current levels could see 54–57% upside. A more aggressive recovery to its 2024 high would deliver gains of over 55%, while a breakout beyond $80 — supported by regulatory licensing in Singapore, AI-powered portfolios, and deeper crypto integration — could put triple-digit prices back into view over the next two to three years.

With $1.2 billion in cash, a $250 million credit facility, and no signs of insider selling, the company is well-capitalized to navigate market cycles and regulatory challenges. For investors seeking exposure to a diversified trading platform that bridges equities, crypto, and tokenized assets, the current price weakness presents a compelling Buy opportunity.

That's TradingNEWS

.