Feb 17 (Reuters) – Stock and crypto trading platform eToro beat estimates for fourth-quarter profit on Tuesday as strong capital market activity drove up trading income, sending its shares up 18.4%.
U.S. equities had an upbeat quarter as interest-rate cuts supported investor confidence, although volatility in crypto prompted some market participants to be cautious. Bitcoin saw its biggest monthly drop since mid-2021 in November.
Meanwhile, a heavy concentration of investments in select AI-linked stocks led to soaring valuations, raising concerns of a bubble in the market.
Net trading income from equities, commodities and currencies rose 43% to $115.6 million, driven by investor rotation between crypto and traditional asset classes, with particularly strong performance in commodities.
Crypto-native customers who had mainly traded digital assets were now trading commodities – something the company had not seen before – CEO Yoni Assia said on a call with analysts.
“So I do think there’s somewhat of a convergence or a shift from crypto, which now has lower volatility to now basically gold, silver and other commodities that have higher volatility,” Assia said.
A new wave of fintech firms has emerged in recent years, challenging established Wall Street institutions by attracting younger investors with cheaper trading, intuitive apps and easier access to a wider range of investment options.
The Tel Aviv-based firm’s assets under administration grew by 11% year-on-year to $18.5 billion.
However, net contribution, which deducts the cost of revenue from crypto assets and margin interest expense, fell 10% to $227 million.
The company posted adjusted profit of 71 cents per share for the three months ended December 31, beating analysts’ estimates of 63 cents per share, according to data compiled by LSEG.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Leroy Leo and Devika Syamnath)
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