eToro has finally (after a few botched attempts) gone public and listed on the NASDAQ stock exchange, which means that you can buy shares in eToro. This is great news for investors as brokers like IG, Plus500, Interactive Brokers and CMC Markets have all done quite well in the past.
It’s really easy to buy shares in eToro, all you need to do is:
- Select a broker that lets you buy US stocks (you can do this on eToro if you like)
- In the search bar type eToro (or ETOR the stock symbol)
- Choose how many shares you want to buy (with eToro you can also select an amount)
- Decide if you want to buy now with a market order (or wait for the price to drop using a limit)
- Click buy and track the performance of your shares in your portfolio
There are a couple of things to watch out for, though.
Firstly, FX fees – when you buy US shares, you have to convert your GBP into USD, this can be expensive on some brokers. eToro is quite expensive for this. Interactive Brokers is the cheapest.
Secondly, dealing commission – eToro doesn’t charge commission, but instead makes money through FX fees when you deposit money. Brokers like AJ Bell and interactive investor do charge a fee though.
Thirdly – you also need to watch out for account charges. There is no account fee with eToro but, you cannot hold eToro shares in a stocks and shares ISA (to get tax free profits), which you can do with firms like Hargreaves Lansdown, although there is a small account fee for doing so.
Who is eToro?
eToro is an Israeli FinTech company that offers a trading and investing platform. It was founded in 2007 with the goal of enabling everyone to trade and invest in a simple and transparent way.
Through its platform, one can trade a wide range of assets including stocks, exchange-traded funds (ETFs), crypto-assets, and commodities. Investors can also copy other traders via its CopyTrader feature.
Today, eToro’s footprint is extensive – it currently operates in over 100 countries worldwide. According to the company, it has 35 million users around the world at present.
In 2023, eToro raised $250 million from a range of investors including SoftBank and ION Group. This put its valuation at $3.5 billion.
How does eToro make money?
eToro makes money in several ways including:
- Trading fees: eToro charges some users (depending on where they are based) fees to buy and sell securities.
- Spreads: Spreads are the difference between the price to buy and sell a security.
- Currency conversion fees: If your base currency is not USD, eToro will charge a fee to convert your money to USD.
- Withdrawal fees: The company charges fees to withdraw money externally.
- Inactivity fees: The company charges a monthly fee to those who don’t log in for 12 months.
Are eToro shares be worth buying?
eToro did well and flew nearly 30% from their IPO price of $52. It’s hard to know if eToro shares will be worth buying at this stage. That’s because we don’t have access to the company’s full financials and its rate of growth right now.
One thing we know, however, is that the company generated revenue of $630 million in 2023. If we take that figure (which is obviously a little out of date now) and compare it to the planned $5 billion valuation, we get a price-to-sales ratio of 7.9.
That multiple doesn’t look particularly high on a relative basis. Currently, rival Robinhood Markets trades on a trailing price-to-sales ratio of 22.8.
So, eToro shares could potentially offer some value in the future.
What are the risks?
It’s worth noting that there are a few risks to consider with eToro shares.
One is in relation to competition. eToro operates in a very competitive industry so there is no guarantee that it will continue to have success. Not only is it up against FinTech platforms such as Robinhood, Trading 212, and Freetrade, but it is also up against larger, more powerful players such as Charles Schwab and Fidelity.
Another risk is financial market volatility. If financial markets were to experience a meltdown, interest in trading and investing could dissipate. This could lead to lower revenue for the company.
Finally, it’s worth highlighting regulatory risk. Financial services is a highly regulated industry and eToro’s services could be vulnerable to regulatory intervention. In the past, the company has been fined by the SEC.
As always, it’s important to understand the risks before investing in a company.
Compare brokers for buying US stocks like eToro
| US Stock Platform | US Stock Commission | FX Rate | Account Fee | ISA | Customer Reviews | More Info |
|---|---|---|---|---|---|---|
 | £0 - £10 | 0.5% | $0 - $96 Yearly | ✔️ | (Based on 678 reviews)
| Visit Broker Capital at risk |
 | £3.99 | 1.5% - 0.25% | £4.99 - £19.99 Monthly | ✔️ | (Based on 1,119 reviews)
| Visit Broker Capital at risk |
 | 0.5 Cents/Share | 0.02% | $0 | ✔️ | (Based on 934 reviews)
| Visit Broker Capital at risk |
 | 0.015 USD/Share | 0.25% | 0.12% - 0.08% | ✔️ | (Based on 73 reviews)
| Visit Broker Capital at risk |
 | $0 | 0%-1.5% | $0 | ❌ | (Based on 277 reviews)
| Visit Broker Capital at risk |
 | £3.50 - £5 | 0.75% - 0.25% | 0.25% (£3.50 Monthly Cap) | ✔️ | (Based on 1,094 reviews)
| Visit Broker Capital at risk |
 | £5.95 - £11.95 | 1% - 0.25% | $0 | ✔️ | (Based on 1,758 reviews)
| Visit Broker Capital at risk |
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