eToro’s Avi Sela on how the fintech company’s IPO opened the way for others to go public

Back in May, eToro became the first major fintech to go public since 2021 – a move it dubbed the "official reopening" of the tech IPO (initial public offering) market. A multi-asset investment and social trading company offering financial services, eToro was founded in 2007 in Tel Aviv. And it has a long standing presence in Cyprus – the island is indeed home to eToro Europe, responsible for servicing clients throughout the EU, with over 250 staff.

So, what does eToro’s public listing signal about broader investor sentiment toward fintech, and where is the market heading from here?

Avi Sela, Global COO - Regulation, eToro, says, “Since our IPO we’ve seen a number of other fintechs and crypto-related businesses either IPO or announce their intention to go public. While the capital markets remain volatile in response to geopolitical and other uncertainties, we’re seeing more companies trying to go public”.

With Cyprus having become a hub for retail investing and fintech firms, it will be interesting to see how the country’s role will evolve as eToro scales as a public company.

• Read more: eToro launches roadshow for IPO targeting $4b valuation

“eToro has had a presence in Cyprus for many years and we don’t see that changing,” says Sela. “Cyprus is home to eToro Europe which is responsible for servicing clients throughout the member states of the European Union. Europe remains our biggest market and our Cyprus office is a key operational hub for eToro. We have over 250 staff in Cyprus - a mixture of local and global talent. We also have a long standing relationship with the local regulator and appreciate that they support innovation which is key for us as a business.”

As he explains, there is a tension between innovation, compliance and global scale right now. However, he adds, “Fintechs like eToro are demonstrating that we can be disruptive - we can innovate in a compliant manner on a global scale”.

Managing growth forecasts and investor expectations

eToro’s most recent prospectus shows a near-even split in trading commissions between stocks and crypto. Given the cyclicality of crypto markets, how does eToro – and similar platforms – manage growth forecasts and investor expectations?

According to Sela, eToro has a stable financial profile due to the diversity of its multi-asset product offering. “We are able to capitalise on diverse market conditions without over-reliance on or overexposure to any single asset class or geography,” he elaborates.

The value of younger investors entering capital markets and the Nasdaq listing

Sela says that historically, increased trading activity in a particular instrument, market or asset class would influence eToro’s revenues in certain quarters or years. “So at certain times we will generate a greater proportion of our revenues from cryptoassets for example, and from equities at other times,” says Sela. “We also generate revenue from interest income, money management fees, and other value-added products and services. The ability to generate revenue from transactions, balances and subscriptions provides additional diversification benefits to our financial profile.”

While revenues related to trading activity from retail investors may be volatile at times, he adds, the overall trendline is clear: “We are seeing greater retail participation and retail investors are participating in capital markets from a younger age. This trend, plus the significant generational wealth transfer, mean that there is strong long-term growth potential.”

• Read more: eToro valued at $5.6b in Nasdaq debut

With eToro now listed on Nasdaq, Sela reveals that the fintech is now focused on growing its share of its existing users’ wallet, growing its user base in existing markets and exploring new markets. Does this mean that the US will become a strategic priority? “This includes continuing to scale our platform in the US,” he clarifies.

Something exciting coming up involving AI

eToro pioneered social trading well before the idea became mainstream. So what’s the next major product or feature it is betting on to drive the next wave of engagement – and revenue?

“We are incredibly excited by the potential for AI,” Sela points out. “We have been deploying AI across our business for many years now but the pace of change and scope of what is possible has accelerated recently. We will have more to share on AI going forward - both for the benefit of our business and our customers.”

Think big and long-term

What does it take to be successful in the fintech industry?

“Thinking big and long-term. You have to be committed to your vision,” Sela stresses. As for eToro’s vision: "eToro’s vision remains unchanged - a world where everyone can trade and invest in a simple and transparent way.”