In a confluence of SPACs and social stock trading, the shares of Fintech Acquisition V (NASDAQ:FTCV) were up as much as 25% in Tuesday’s pre-market trading on news of a merger with eToro. FTCV stock has been trading in a narrow range typical of special purpose acquisition companies following their initial public offerings.
Since FTCV stock debuted in December, market watchers have been closely monitoring for signs of what serial deal-maker Betsy Cohen would do with her $250 million capital raise. With the eToro SPAC merger, she’s getting a firm that’s fast becoming a rival to Robinhood just as that platform has been making headlines for all the wrong reasons.
Under the U.S. regulatory protocols of the Financial Industry Regulatory Authority (FINRA) since last year, eToro is expected to start providing stock trading service in the U.S. in 2021.
The deal also cements Cohen’s role on the fast-growing Tel Aviv fintech scene. Last month, another Cohen-led SPAC, FTAC Olympus Acquisition Corp (NASDAQ:FTOC), announced plans to merge with Payoneer. That deal is expected to create a $3 billion cross-border payments powerhouse.
Target eToro’s valuation has multiplied by more that 12x in less than three years, after the firm raised $100 million at an $800 million valuation in 2018. By late 2020, it was valued at $2.5 billion in a $50 million secondary market deal with a U.S. institutional buyer.
FTCV Stock Investors Getting In on Social Trading Trend
Brothers Ronen and Yoni Assia founded eToro in 2007. While not licensed to trade in its native Israel, the company gained recognition from regulators in the United Kingdom, Australia and Cyprus. eToro has gained popularity in European and Asian countries.
The social investment network offers users a choice of which assets to invest in from commission-free fractional equities to crypto assets, and a choice of how to invest. Users can trade directly themselves, invest in a smart portfolio or replicate the investment strategy of successful investors on the platform at no extra cost with the simple click of a button.
The company said that in 2020, it registered more than 5 million new users and generated gross revenues of $605 million, representing year-over-year growth of 147%. It saw more than 75 million trades executed on the eToro platform.
The eToro SPAC merger is expected to have an estimated implied equity value of approximately $10.4 billion at closing, reflecting an implied enterprise value for eToro of approximately $9.6 billion, according to the SPAC’s press release on Tuesday. The deal includes commitments for a $650 million common share private placement from investors including ION Investment Group, Softbank Vision Fund 2, Third Point LLC, Fidelity Management & Research Company LLC and Wellington Management.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.