Trading Platform eToro plans to go public in a $10.4 billion SPAC deal with FinTech Acquisition Corp. V. Yoni Assia, eToro Founder & CEO and Betsy Cohen, FinTech Masala Chair join Yahoo Finance Live to discuss.
Video Transcript
- It's been a very busy year for retail traders and for all of the players in the brokerage and trading platform space. And we now have one of them set to come public via a SPAC deal. eToro will combine with FinTech Acquisition Corp. V. And we're joined now by Yoni Assia, who is the founder and CEO at eToro, as well as Betsy Cohen, the chair at FinTech Acquisition Corp. V. Good to see you both this morning.
Yoni, let's start with January. Looking on the investor presentation slide 16, the business kind of goes nuts in January. 1.2 million registrations, $75 million trades. How much has that activity continued? And how much did that month maybe sharpen your plans to bring the company to the market?
YONI ASSIA: I think first of all, we've seen an amazing 2020, as well. So we've seen 2020 grow revenues by 147% from 19 to 20 to over $600 million. And within our projections, you can see that we're expecting-- we're projecting over $1 billion revenues in 2021.
I think there is definitely a perfect storm that started in 2021. We're seeing crypto rally with Bitcoin at all-time high. And a significant part of our business is crypto. We are the only global broker dealer offering commission-free stock trading in 100 countries. And obviously markets are at all-time high.
And it's not only that markets are at all-time high. We're seeing a significant increase in the interest and demand of a whole generation that are looking to invest in US stocks, that are looking to participate in the markets. And for the majority of our users, this is the first time that they actually opened a brokerage account and make their first trade.
And I think the fact that we enable our users through our social network to collaborate and communicate with the 20 million registered users from all around the world enables them to educate themselves. And it's an easier path to the markets when you're surrounded by successful investors who you can actually see their track record and automatically copy them, as well.
- Betsy, I want to bring you into this. As we know from the last time we've had you on the program, you have a lot of experience in this area, both in fintech and in SPACs. You've been doing SPACs for longer than they were cool in this present iteration. There are a lot of trading platforms out there. We know that Robin Hood might still be coming public. Coinbase is coming public. Why did you pick eToro? I mean, there certainly are other privately held still trading platforms, as well, that you could have invested in.
BETSY COHEN: eToro is a very special platform, unique throughout the world. First of all, Coinbase and Robinhood are just in the United States. And eToro is in 100 countries ex-US, and has a great opportunity in the US. It also has a social network platform that allows new investors and less sophisticated investors to learn and to copy more sophisticated investors. And that is a patented, differentiated offering that we think is very, very helpful to the investing patterns of young people.
- Yoni, part of becoming a public company is investors get to know the people running the public company. Curious on where you got the inspiration to launch eToro and where are you at in the US rollout?
YONI ASSIA: I've been passionate about capital markets since I was 13. And my father was also a CEO and founder of a NASDAQ-listed software company out of Israel. So we've always been talking about the markets. And when we started eToro, I founded it together with my older brother, who comes from a product design background. And we really wanted to create a different user experience to simplify the experience enabling people to access the global markets.
And I always wanted to deal with the intersection of capital markets and technology. Now, when we started eToro, this was 2007. This was really early days of social networking. And what we realized is that social networking enables people to educate themselves through collaborating and communicating with others.
And I think just on another small personal note, as we've seen our network today of 1,400 popular investors who generated about 51% average returns last year, those are the ones who are being copied on our platform. I think we're very excited to see that network of successful investors grow. And as they grow their track record, also with time it's easier for people to trust successful investors that have a track record suddenly of five, six, seven, eight years on the eToro platform globally.
- And Betsy, I'm curious how you're thinking about this current moment of retail enthusiasm for getting into the market? Certainly the network part of eToro has a large appeal, and how it looks from your seat to see a lot of people coming into the market at once, and at least as far as I can tell, having a lot of fun doing so?
BETSY COHEN: Well, I think that eToro is very helpful in--
[CHIMING]
--not only to have fun, but to really understand what they're doing. And investing is not a game. It's a very serious occupation. And eToro underscores and allows people to invest by communicating with one another and learning from one another in a very, very differentiated way.
- And Yoni, finally, I want to ask you, as well, about some of the regulatory scrutiny that has come surrounding GameStop and the short squeezes that we saw, because effectively, what your app does-- I mean, investing may not be a game, but certainly your app looks to make it fun, I think it's safe to say, by having this sort of collaborative networking aspect, and also for people to try to maximize their returns.
How do you do that right now at sort of a delicate regulatory moment? Are you concerned at all about that or are there any tweaks you've made to the platform as a result of that?
YONI ASSIA: Sure. So first of all, I think we believe firmly that retail investors should have access to the public markets and should participate in the public markets. It has been our vision since founding eToro to open the global markets for everyone to trade and invest in a simple and transparent way. And I think what we're seeing now is just a tipping point or an inflection point of retail interest in the public markets or in the crypto markets.
And in general, that's a very positive things. As digital platforms like eToro scale, either in the US or globally, obviously we do have a responsibility to make sure that our customers are educated about risk management. So we do view that as part of our responsibility. Our chief investment office constantly sends information and educational materials around modern portfolio theory, around the importance of diversification.
And while we're also big believers in crypto assets as an asset class that should be in most millennials' portfolios, we believe it should be a part of a diversified portfolio across different equity markets as well as cryptocurrencies. So I think the key here is that we, the digital platforms, have the opportunity to re-teach people and help people engage with the markets.
And I think in general if any industry sees that hyper growth, I think regulators eventually want to see that new, innovative products reach the market and that they create better solutions for, eventually, investors to invest their money. And again, we have a lot of features in the platform, whether it's us doing stability and appropriateness questionnaires to understand the risk profile of our users and then personalize the actors and who you can copy based on those questionnaires.
So there is a lot of both technology and responsibility of making sure that users are educated about the importance of risk management and diversification.