Retail FX and CFDs broker eToro has filed the financial statements for 2020 at its FCA licensed UK arm eToro (UK) Limited, which more than anything gives a good glimpse at the rapid rise of eToro over the past few years and the relative importance of eToro’s UK arm in the grand scheme of things for the social trading focused firm.
eToro UK achieved net revenues of USD $41.9 million in 2020, which was up a whopping 717% from $5.1 million in 2019. The $41.9 million figure represented about 7% of eToro’s global revenues of $602 million in 2020. The increase in revenues was driven by a significant growth in eToro’s client base as a result of an influx of new UK users as well as the transfer of some existing clients from other eToro entities to the UK entity.
To support this growth, UK operating expenses increased by 602% to $39.8 million, although a major chunk of that – about $36 million – was in the form of “payments” to other eToro entities for marketing and trade execution services.
eToro said that 2020 will be remembered as the year of the retail investor. The company said it is seeing a confluence of circumstances: zero (and negative) interest rates, an acceleration of digital transformation (driven by the Covid19 pandemic), and the lowering of the barriers to entry through automation, fractional shares and commission-free stock investing, all driving greater retail participation.
In 2020, the eToro Group welcomed over 5 million new registered users globally to the platform and it now has over 20 million registered users globally. eToro generated total commissions of $602 million in 2020, representing year-on-year growth of 146%. Total commissions are comprised of commissions from trading activity, interest and other charges. This growth fueled a rise in trading activity and eToro executed over 326 million trades globally in 2020, up from 91 million in 2019.
The majority of new funded accounts globally in 2020 invested in commission-free stocks, crypto or to copy another investor on the platform. More than 60% of eToro users invest in more than one product type. The company said that it sees a similar pattern in the UK.
Many of eToro’s clients are investing in household names whose products and services they use on a daily basis, such as Alphabet (Google) and Zoom. The five most bought stocks by investors globally on eToro in 2020 were: Nio, Tesla, Apple, Amazon and Palantir.
The median age of an eToro user globally is 34. Its global community remains 86% male, however, in 2020 the company saw a small but significant rise in the number of women coming to eToro. In 2020 eToro saw a 402% increase in women funding accounts globally compared with a 275% increase for men.
eToro revenue growth has slowed in 2021, as the company is seeking to go public via a merger with a SPAC (Fintech Acquisition V), at a valuation of about $10 billion. The eToro-SPAC merger is now expected to close in Q4, subject to regulatory and shareholder approvals.