Robinhood rival eToro agrees $120 million share sale at discounted valuation
The eToro logo is seen during the 2021 Web Summit in Lisbon, Portugal.
Pedro Fiúza | Nurphoto | Getty Images
Stock trading platform eToro agreed to a $120 million secondary share sale, giving the company a slightly lower valuation than the $3.5 billion it was valued at in a primary funding round earlier this year.
The Israeli digital brokerage, which offers users trading in stocks, crypto, and contracts for difference, gave early employees and angel investors a chance to sell shares to some of eToro’s existing investors, according to a memo to employees obtained by CNBC.
The round is a secondary share sale, meaning the company hasn’t issued any new shares and won’t net any income from the transaction. However, it’s an indicator of the price investors are currently willing to pay to own shares of the firm.
It comes after eToro last year scrapped its plans to go public in a merger with a blank-check company, Fintech V.
The deal would have valued the company at $10 billion, but a downturn in equity and crypto prices threw a spanner in the works, as investors reassessed their exposure to tech and retail brokerages suffered a slump in trading activity.
“As a business which continues to demonstrate sustainable, profitable growth we are considered an attractive investment opportunity by many investors,” Yoni Assia, eToro’s CEO and co-founder, said in the Monday memo to employees.
“This secondary transaction will give existing shareholders in eToro and veteran employees who have vested options the opportunity to sell a proportion of their shares to these purchasers.”
“This is not a primary i.e. eToro is not raising money — rather it is a moment for some long standing shareholders and employees to take some liquidity. As always, please maintain confidentiality and do not share any details of this potential transaction with anyone. Employees with eligible options will receive an email with further details.”
EToro most recently raised $250 million from investors at a $3.5 billion valuation, far lower than the $10 billion it was seeking in its bid to float via SPAC.
Investors in that round included SoftBank Vision Fund 2, ION Investment Group and Velvet Sea Ventures. The investment came in the form of an advance investment agreement, which is where investors pay in advance for shares that will be allocated at a later date, sometimes at a discount.
EToro agreed it would convert the investment to equity on the condition that the SPAC deal doesn’t go ahead — which it didn’t.
Earlier this year, eToro signed a partnership with Twitter, now known as X, allowing users of the social media platform to access stock and crypto trading by searching for so-called “cashtags,” which are searchable by adding a dollar sign before the ticker symbol of a stock or other asset.
EToro said it is looking to expand its partnership with Twitter, or X, in a number of ways. The company’s CEO recently met with X CEO Linda Yaccarino in New York to discuss working on expanding their partnership.
EToro, like many online wealth management platforms, benefited from the surge of demand during the Covid-19 pandemic when people were stuck indoors and had more time — and in some cases money — to splash a bit of their excess cash on stocks and other assets.
GameStop, and several other so-called “meme” stocks, skyrocketed in response to heightened retail investor demand which put pressure on short-selling funds.
More recently, online brokerage platforms have had a tougher time. The rising cost of living has made it tougher for consumers to part with the cash they were flush with during the days of Covid. Freetrade, the U.K. brokerage startup, slashed its valuation by a whopping 65% in a crowdfunding round, citing a “different market environment.”
Read the full memo eToro CEO Yoni Assia sent out to staff below:
Dear eTorians,
As August approaches I wanted to take a moment to acknowledge the many achievements of H1 and share an outlook for H2.
As outlined in July’s AHM, we had strong business performance in the first half of the year resulting in EBITDA (profits) of over $50 million. Funded accounts now stand at almost 3 million and our assets under administration (AuA) are $7.8 billion. This positive start to the year was driven by the rally in equity markets (in June we saw the highest volume of equities trading since 2021) plus a recovery in crypto markets. We have also maintained our focus on costs to ensure sustainable, profitable growth.
2023 to date has been very busy in terms of product development, launches and partnerships with highlights including: the significant upgrade to our charts via a partnership with TradingView (more coming soon), an ISA with MoneyFarm, major milestones in terms of UX optimization including the new AI assistant, the launch of the amazing new eToro Academy, the launch of extended hours trading, expanding our football sponsorships to include women, adding more assets and so much more.
I also want to update that we were recently approached by several existing investors who have shown an interest in buying more shares in eToro. As a business which continues to demonstrate sustainable, profitable growth we are considered an attractive investment opportunity by many investors. [Please note this is not financial advice!] This secondary transaction will give existing shareholders in eToro and veteran employees who have vested options the opportunity to sell a proportion of their shares to these purchasers. This is not a primary i.e. eToro is not raising money – rather it is a moment for some long standing shareholders and employees to take some liquidity. As always, please maintain confidentiality and do not share any details of this potential transaction with anyone. Employees with eligible options will receive an email with further details.
For those of you taking a well-earned break in August, enjoy your vacation and I hope you come back refreshed and energized for an exciting second half of the year.
Best,
Yoni
Anne Wojcicki attends the WSJ Magazine Style & Tech Dinner in Atherton, California, on March 15, 2023.
Kelly Sullivan | Getty Images Entertainment | Getty Images
23andMe CEO Anne Wojcicki and New Mountain Capital have submitted a proposal to take the embattled genetic testing company private, according to a Friday filing with the U.S. Securities and Exchange Commission.
Wojcicki and New Mountain have offered to acquire all of 23andMe’s outstanding shares in cash for $2.53 per share, or an equity value of approximately $74.7 million. The company’s stock closed at $2.42 on Friday with a market cap of about $65 million.
The offer comes after a turbulent year for 23andMe, with the stock losing more than 80% of its value in 2024. In January, the company announced plans to explore strategic alternatives, which could include a sale of the company or its assets, a restructuring or a business combination.
23andMe has a special committee of independent directors in place to evaluate potential paths forward. The company appointed three new independent directors to its board in October after all seven of its previous directors abruptly resigned the prior month. The special committee has to approve Wojcicki and New Mountain’s proposal.
“We believe that our Proposal provides compelling value and immediate liquidity to the Company’s public stockholders,” Wojcicki and Matthew Holt, managing director and president of private equity at New Mountain, wrote in a letter to the special committee on Thursday.
Wojcicki previously submitted a proposal to take the company private for 40 cents per share in July, but it was rejected by the special committee, in part because the members said it lacked committed financing and did not provide a premium to the closing price at the time.
Wojcicki and New Mountain are willing to provide secured debt financing to fund 23andMe’s operations through the transaction’s closing, the filing said. New Mountain is based in New York and has $55 billion of assets under management, according to its website.
23andMe declined to comment.
WATCH: The rise and fall of 23andMe
Hims & Hers
Shares of Hims & Hers Health tumbled more than 23% on Friday after the U.S. Food and Drug Administration announced that the shortage of semaglutide injection products has been resolved.
Semaglutide is the active ingredient in Novo Nordisk‘s blockbuster weight loss drug Wegovy and diabetes treatment Ozempic. Those medications are part of a class of drugs called GLP-1s, and demand for the treatments has exploded in recent years. As a result, digital health companies such as Hims & Hers have been prescribing compounded semaglutide as an alternative for patients who are navigating volatile supply hurdles and insurance obstacles.
Compounded drugs are custom-made alternatives to brand-name drugs designed to meet a specific patient’s needs, and compounders are allowed to produce them when brand-name treatments are in shortage. The FDA doesn’t review the safety and efficacy of compounded products.
Hims & Hers began offering compounded semaglutide to patients in May, and it owns compounding pharmacies that produce the medications.
Compounded medications are typically much cheaper than their branded counterparts. Hims & Hers sells compounded semaglutide for less than $200 per month, while Ozempic and Wegovy both cost around $1,000 per month without insurance.
The FDA said Friday that it will start taking action against compounders for violations in the next 60 to 90 days, depending on the type of facility, in order to “avoid unnecessary disruption to patient treatment.”
“Now that the FDA has determined the drug shortage for semaglutide has been resolved, we will continue to offer access to personalized treatments as allowed by law to meet patient needs,” Hims & Hers CEO Andrew Dudum posted Friday on X. “We’re also closely monitoring potential future shortages, as Novo Nordisk stated two weeks ago that it would continue to have ‘capacity limitations’ and ‘expected continued periodic supply constraints and related drug shortage notifications.'”
Him & Hers’ weight loss offerings have been a massive hit with investors. Shares of the company climbed more than 200% last year, and the stock is already up more than 100% this year despite Friday’s move.
Even before it added compounded GLP-1s to its portfolio, the company said in its 2023 fourth-quarter earnings call that it expects its weight loss program to bring in more than $100 million in revenue by the end of 2025.
Despite the turbulent regulatory landscape, Hims & Hers has showed no signs of slowing down.
On Friday, the company announced it has acquired a U.S.-based peptide facility that will “further verticalize the company’s long-term ability to deliver personalized medications.” Hims & Hers will explore advances across metabolic optimization, recovery science, biological resistances, cognitive performance and preventative health through the acquisition, the company said.
That move comes just days after Hims & Hers also bought Trybe Labs, the New Jersey-based at-home lab testing facility. Trybe Labs will allow Hims & Hers to perform at-home blood draws and more comprehensive pretreatment testing.
Hims & Hers did not disclose the terms of either deal.
Technology
Tesla recalls more than 375,000 vehicles in U.S. due to failing power-assisted steering systems
Tesla models Y and 3 are displayed at a Tesla dealership in Corte Madera, California, on Dec. 20, 2024.
Justin Sullivan | Getty Images
Tesla is voluntarily recalling 376,241vehicles in the U.S. to correct an issue with failing power-assisted steering systems, according to records posted to the website of the U.S. National Highway Traffic Safety Administration.
In a safety recall report posted on the NHTSA website, Tesla said the recall includes Model 3 and Model Y vehicles that were manufactured for sale in the U.S. from Feb. 28, 2023, to October 11, 2023, and that were equipped with a certain older software release.
The records said printed circuit boards in the steering systems in affected vehicles could become overstressed, causing the power-assist steering to fail in some cases when a Tesla vehicle rolled to a stop and then accelerated.
When electronic power-assist steering systems fail in a Tesla, drivers need to exert more force to steer their cars, which can increase the risk of a collision.
Tesla told the vehicle safety regulator that it was not aware of any crashes, injuries or deaths related to the power steering failures, and that it was offering an over-the-air software update as a remedy.
The recall follows an earlier related probe and voluntary recall in China concerning the same systems.
President Donald Trump has appointed Tesla CEO Elon Musk to lead a team that is slashing the federal government workforce, and in some cases, regulations and entire agencies. Those cuts already affected the NHTSA, an agency Musk has long seen as standing in the way of some of his ambitions at Tesla.
The regulator has been engaged in a yearslong investigation into safety defects in the systems that Tesla markets currently as its Autopilot and Full Self-Driving (Supervised) options. The features do not make Tesla cars into robotaxis. They require a human driver ready to steer or brake at any time.
The Washington Post reported on Thursday that Musk’s team has led mass firings at the NHTSA, reducing the agency’s workforce and capacity to investigate companies including Tesla by about 10%.
Tesla didn’t respond to a request for comment.
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