Looking to Buy eToro With Goldman Sachs Price Target in View
I'm looking for a chance to add to my position in the financial services firm.
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We have mixed market action to start the week, but breadth is running positive, and there are some interesting pockets of momentum in space stocks, vertical aircraft, nuclear-related names and data centers. Some of the names on my screens include Joby Aviation JOBY, AST Spacemobile ASTS, Rocket Lab RKLB, Redwire RDW, Ondas Holdings ONDS and Nebius Group (NBIS).
Another name that I'm trading is eToro (ETOR). ETOR has garnered considerable attention lately, and its price action reminds me of another recent hot IPO, Coreweave CRWV.
ETOR is an online trading platform that allows trading in stocks, cryptocurrencies, ETFs, commodities, indices, forex and other financial instruments. It was founded in 2007 and is headquartered in Israel.
Seventy percent of ETOR's funded accounts are in Europe and the U.K., 16% are in Asia-Pacific and only 10% are currently in the Americas, including the U.S. ETOR was initially limited to just cryptocurrencies in the U.S. and has faced other regulatory hurdles from the SEC; however, it now offers limited equities trading. Lifting those restrictions will be key to growth in the U.S., but Europe is likely to continue to be its dominant market in the near future.
What is most intriguing about ETOR is that it has combined social media with the brokerage function. It has been compared to a combination of Reddit RDDT and Robinhood Markets HOOD.
The social trading aspect is a core feature of its platform and integrates social networking with online trading, allowing users to interact, share insights and replicate the trades of experienced investors.
The key component of this is a CopyTrader feature that allows users to automatically copy the trades of successful traders (known as Popular Investors) in real-time. Users can browse profiles, review returns, risk levels and portfolio composition, and allocate funds to mirror their chosen trader's actions. The minimum amount to copy a trader is $200, and users can copy up to 100 traders simultaneously. CopyTrader is primarily available for crypto trading in the U.S., with plans to expand to stocks and ETFs.
The Social News Feed enables users to follow assets and traders, post updates, comment and engage in discussions and operates like X and Facebook. The Popular Investor Program incentivizes successful traders to share their strategies by rewarding them based on the number of copiers they attract. Popular Investors must maintain transparency, as their trades and stats are public, encouraging accountability and consistent performance. There is also financial education and various analytical tools.
The IPO was very successful, and the stock is trading at around $71 and pricing at $52 on May 14. Initial analyst coverage is starting on June 9, with target prices ranging from a low of $65 to a high of $85.
Goldman Sachs GS placed a $76 target on the stock and sees ETOR as an attractive market share gain story in the "fragmented" European retail brokerage market. The company has a "differentiated" offering versus peers in terms of geographic and product breadth. Goldman believes CopyTrader is both a loss mitigation tool and a tool to facilitate social trading, "which many younger investors want."
There was a brief "sell the news" reaction to the initial coverage on Monday morning, but it was shrugged off quickly as dip buyers took advantage of the pullback. The underlying support is impressive and is one of the reasons that I compare the stock to Coreweave. I am looking for opportunities to add to my position in pullbacks.
At the time of publication, DePorre was long ETOR, JOBY, RDW, ASTS and ONDS.
