Etoro: ‘Gradual thawing’ of financial markets fails to stop trading platform taking back step

A “gradual thawing” of financial markets failed to stop the UK arm of stock trading platform Etoro taking another backwards step financially during 2023, it has been revealed.

The UK arm of the Israel-headquartered trading and investment group has posted a net income of $125.7m (£95.8m) for the 12 months, down from the $147.2m (£112.2m) it reported in 2022.

The London-based arm’s latest total comes after it racked up a net income of $264.1m (£201.3m) in 2021.

Etoro’s trading commissions also fell from $131.3m (£100m) to $106m (£80.8m) in the year, having totalled $307.8m (£234.6m) in 2021.

The newly-filed accounts with Companies House also reveal that its pre-tax profit declined from $4.4m (£3.3m) to $3.2m (£2.4m) in the year. Its total in 2021 had been $3.7m (£2.8m).

Trading platforms globally grappled with a slide in performance and activity last year after a surge in interest through 2021 and 2022, fuelled by Covid lockdowns and volatile markets.

Rising interest rates also boosted the appeal of cash last year, while a downturn in equity markets and crypto prices pushed investors out of the market.

However, eToro said investor appetite was now showing signs of a resurgence.

“Improving economic conditions and a crypto and equities rally [provided] the backdrop for what we believe will be a strong year for the business,” Etoro said.

The UK arm said the drop in its net income last year was in part offset by a fall in operating expenses from $140m (£106.7m) to $124m (£94.5m) as it “continued to improve efficiencies across the business”.

The firm’s 2023 results are still ahead of its performance in 2020 when its net income totalled $41.8m (£31.8m) and its pre-tax profit stood at $2.1m (£1.6m).

Etoro said the wider group ended 2023 with over 35m registered users globally and 3m funded accounts, up five per cent year on year.

The group added that it generated total commissions of around $630m (£480.2m) in 2023 and over $100m (£76.2m) in EBITDA [earnings before interest, taxes, depreciation and amortisation].

Retail investors reverse losses thanks to big tech gains – Etoro

A statement signed off by the board said: “2023 saw a gradual thawing of financial markets following almost a year of bear territory, allowing many retail investors to reverse losses from 2022 and get their portfolios back on track.

“However, whilst last year was a big improvement on its predecessor, aside from the gargantuan AI-fuelled performance of big US tech stocks, particularly the so-called ‘Magnificent Seven’, it was a case of slow and steady for markets grappling with higher interest rates and other economic headwinds.

“Despite these challenges, retail investor sentiment markedly improved throughout the year, according to our quarterly Retail Investor Beat survey.

“This was in large part thanks to their affinity to big tech.

“Retail investors embarked AI with open arms, not just in their portfolios but in their investing approach, with many now using AI tools such as ChatGBT to support decision making.

“Towards the end of the year, we also saw Bitcoin start to rally ahead of January’s approval of a spot Bitcoin RTF.

“This momentum has continued into 2024 and as a multi-asset investing platform, Etoro has been well positioned for the crypto comeback, providing our users with straightforward access to crypto alongside a wide range of other asset classes.”

‘A lot of opportunities for retail investors’

On 2024, Etoro said: “In 2024, the picture for markets has improved and Etoro Group is well positioned to capitalise on the more favourable dynamics.”

It added: “We see a lot of opportunities for retail investors in 2024 and we will continue improving our offering whilst giving our growing user base a simple and transparent means of accessing global markets.

“The retail investing landscape continues to evolve at a fast pace and there is a lot to be optimistic about.”

In a statement, a spokesman for Etoro added: “We saw a low level of volatility in 2023 with various markets such as commodities and crypto remaining fairly muted for the majority of the year.

“During 2023, we also invested heavily in new products and features, whilst further developing our ISA offering.

“This approach is already paying off, with 2024 shaping up to be one of the strongest ever years for our UK business.”