eToro: Undue Pessimism Misses The Bigger Picture Of U.S. Expansion (Upgrade)

Summary

• eToro is deeply oversold, trading at just ~4x FY26 adjusted EBITDA, despite solid fundamentals and a healthy U.S. expansion catalyst.
• Crypto trading weakness is a risk, but only 26% of net contribution margin comes from crypto; stock trading volumes are rising.
• U.S. equity market entry and CopyTrader launch drive growth, with funded accounts increasing by 30k since October, offsetting crypto and interest rate headwinds.
• I upgrade ETOR to strong buy ahead of Q4 earnings, seeing muted expectations and a compelling risk/reward profile at current valuation.