Meta’s misinformation problem has local election officials struggling to get out the truth
Voters cast their mail-in ballots at a ballot drop box outside Maricopa County Recorder and Elections Department southeast Mesa office during the Arizona state primary election in Mesa, Arizona, U.S. July 30, 2024.
Rebecca Noble | Reuters
Derek Bowens has never had such an important job. He’s the director of elections in Durham County, North Carolina, one of the most-populous areas of a state that’s increasingly viewed as crucial to the 2024 presidential contest.
So when a former precinct official emailed Bowens in July to warn him of a post containing voting misinformation that was spreading virally on Facebook, Bowens quickly recognized that he may be facing a crisis.
The post, written as if from an authority on the subject, said voters should request new ballots if a poll worker, or anyone else, writes anything on their form, because it would be invalidated. The same incorrect message was spread on Facebook during the 2020 election, but the platform flagged the content at the time as “false information” and linked to a story that debunked the rumor by Facebook’s fact-checking partner, USA Today.
Bowens said no such tag appeared on the post, which was widespread enough that the North Carolina State Board of Elections had to issue a press release on Aug. 2, informing voters that false “posts have been circulating for years and have resurfaced recently in many N.C. counties.”
“It was spreading and there wasn’t anything happening to stop it until our state put out a press release and we started engaging with our constituency on it,” Bowens told CNBC in an interview.
The elections board wrote a post on Facebook, telling voters to “steer clear of false and misleading information about elections,” with a link to its website. As of Wednesday, the post had eight comments and 50 shares. Meanwhile, multiple Facebook users in states like North Carolina, Mississippi and New Jersey continue to share the ballot misinformation without any notification that it’s false.
CNBC flagged posts with the false information to Meta. A company spokesperson said, “Meta has sent them to third-party fact-checkers for further review.”
Across the U.S., with 40 days until the Nov. 5 election, state and local officials say they are puzzled by what to expect from Facebook. Like in the past two presidential election cycles, the spread of misinformation on the social network has threatened to disrupt voting in what’s expected to be another razor-thin contest decided by thousands of voters in a handful of states. Recently, a Facebook post containing a false claim about Haitian immigrants eating pets in Springfield, Ohio, ballooned out of control and gained resonance after it was repeated by Republican nominee Donald Trump in a debate.
In 2016, Facebook was hammered by Russian operatives, pushing out false posts about Hillary Clinton to bolster Trump. In 2020, the site hosted rampant misinformation about politically charged issues like Covid treatments, masking and voter fraud.
The big difference this go-round is that Facebook has largely removed itself from the equation. In 2021, Meta began pushing political and civic content lower in its algorithms, which contributed to a dramatic decline in news traffic last year for publishers. Earlier this year, Meta announced that it would deprioritize the recommendation of political content on Instagram and its Twitter-like Threads service, a move the company said more aligns with what consumers want to see on their feeds.
Still, posts with false information can spread rapidly across wide swaths of users along with comments that amplify the misinformation, and government agencies have little ability to counteract them, because they have such limited reach on the platform.
And while Facebook has lost some of its prominence due in part to the rise of TikTok, particularly among younger audiences, the site still had more than 200 million daily users in the U.S. and Canada at the end of last year, the last time it issued regional numbers. Facebook and Instagram are generally both in the top 10 among the most-visited websites and most-popular apps in the U.S, according to the Pew Research Center and Similarweb.
Interviews with nearly a dozen regional and statewide government officials with election-related duties reveal the challenges they say they’re having using and monitoring Meta’s apps, as well as other social networking services like X, now owned by Elon Musk. The officials say they’re working overtime to ensure the safety and integrity of the election but say they’re receiving little effective help from the companies, which scaled back their trust and safety teams as part of broader cost-cutting efforts that began in 2022.
Meta ultimately cut 21,000 jobs, including in trust and safety and customer service, over multiple rounds of layoffs. As CNBC reported last year, the company dissolved a fact-checking tool that would have let news services like The Associated Press and Reuters, as well as credible experts, add comments at the top of questionable articles as a way to verify their trustworthiness. Reuters is still listed as a fact-checking partner, but an AP spokesperson said the news agency’s “fact-checking agreement with Meta ended back in January.”
The Meta spokesperson told CNBC in a statement that the company’s “integrity efforts continue to lead the industry and we have around 40,000 people globally working on safety and security — more than we had during the 2020 cycle.” The company says it now partners with about 100 third-party fact-checking groups across the globe “who review and rate viral misinformation in more than 60 languages.”
Challenges in Maricopa County
Like North Carolina, Arizona is one of the seven swing states expected to determine whether Trump or Vice President Kamala Harris, the Democratic nominee, win the presidency.
That reality has put Taylor Kinnerup in the spotlight. Kinnerup is the communications director for the recorder’s office of Maricopa County, home to more than half of Arizona’s population.
Kinnerup and her colleagues use social media to distribute up-to-date information about election-related procedures, like when residents can mail in early ballots or where to find their voting center. It’s a particularly sensitive job following Trump’s false claims of voter fraud in Arizona in 2020, when the state went blue for the first time in a presidential contest since 1996.
Given Maricopa County’s high profile during the election season, the state often attracts attention from Facebook users across the country. Many of them, Kinnerup said, are older and still leave comments about debunked conspiracy theories, such as the false claim that Sharpie markers invalidate ballots.
Kinnerup said her team places “extreme emphasis on constant communication and transparency to the public,” actively sharing election-related content across Facebook and Instagram, particularly during peak hours when it’s more likely to reach voters.
A few months ago, Kinnerup discovered that her office’s Facebook and Instagram accounts were no longer linked, meaning she couldn’t access the apps using the same credentials, or automatically schedule a single post to go across both sites.
Ahead of the primary elections in July, Kinnerup said she struggled to resolve the account issues with Meta. She said she engaged in a monthslong email exchange with numerous representatives, but found there was “no way to really make progress.” When she did get a response, it was little more than a canned statement, Kinnerup said.
Meanwhile, Kinnerup is busy overseeing media and constituent tours of the county’s election facilities to help dispel false notions that the process is being rigged as her office continues to deal with the fallout of the 2020 election. Kinnerup said she led more than 20 such tours in June.
“I couldn’t be dealing with Meta every single day, because I had to be giving tours,” Kinnerup said. The time spent trying to find a fix “was a huge issue for me,” she said.
By the time Kinnerup said she’d resolved her account issues, in mid-July, she and her colleagues had wasted countless hours on the problem, leaving her team to “feel we were put in a position where the full message we were trying to get out wasn’t ever fully there.”
Even with her office’s Facebook and Instagram accounts working again, Kinnerup says their organic social media posts generate little engagement, and her team has used sponsored ads to help expand reach across the platforms. Her team has continued with the facility tours, leading 25 this month.
Meta’s spokesperson said the company has been hosting training sessions for state and local officials since February, informing them of tools like voting alerts, which allow them to send messages to people in their area.
Former US President and Republican presidential candidate Donald Trump leaves at the end of a presidential debate with US Vice President and Democratic presidential candidate Kamala Harris at the National Constitution Center in Philadelphia, Pennsylvania, on September 10, 2024.
Saul Loeb | AFP | Getty Images
“There are multiple channels by which officials can reach us, including teams responsible for specific states and regions, and our ability to respond to them remains unchanged,” the spokesperson said.
Kinnerup said she was not “aware of any of this,” and in her year in the role has “never received any direct communication with Meta that I’m aware of.”
Bowens told CNBC in a follow-up email that he “was not aware of the sessions or the tools.”
Congress is well aware of potential problems. During a Senate hearing last week on election threats, Meta’s head of global affairs, Nick Clegg, fielded questions about the company’s election preparedness. Sen. Susan Collins, R-Maine, expressed concern about the safety and integrity of “down-ballot races at the state level, county level, local level.”
Intelligence agencies, Collins said, have told senators that bad actors from China could be focusing on disrupting regional races as opposed to the presidential election, and that state and regional officials “are far less likely to receive the kinds of briefings that we receive or to get information from Homeland Security or the FBI on how to be on alert.”
Clegg said Collins was “right to be concerned” and that Meta’s “vigilance needs to be constant.”
“It can’t just sort of peak at the time of the presidential elections,” Clegg said.
‘Three people will see it’
For Scott McDonell, the Dane County clerk in the swing state of Wisconsin, it’s been difficult to share accurate voting information on Facebook from his office’s official government account, which only has 608 followers on Facebook. McDonell said his posts get very little traction compared with years past.
“If I link to a story about election security, three people will see it,” McDonell said. Posts that include pictures do marginally better, he said, because “Facebook likes pictures.”
“Don’t link to an article, that will go to zero,” he said.
McDonell said many of his colleagues have “gotten abused” so much on Facebook in recent years that they don’t post about elections anymore.
“Basically, your average county clerk is terrified of it, and they just do it to share baby photos,” McDonell said.
In Los Angeles County, Jeramy Gray, the chief deputy of the registrar-recorder/county clerk office, said small government offices often lack the resources needed to effectively utilize social media and to troubleshoot problems.
Meta “recently put a team together to assist” his office, Gray said, adding that the company appears to be the “most mature” of the big platforms even if it’s not a “model partner.”
“What I would like to see is just more engagement from them, at least three to four months from a large national election, for them to reach out to key stakeholders at the state and local level to really talk about what they can do or what they’re doing,” Gray said.
Bowens, in North Carolina’s Durham County, said the tech platforms could be much more helpful in assisting his office and others as they navigate through some of the confusion about what type of content is acceptable.
Bowens said he’s concerned about acting too aggressively because of potential censorship issues and recognizes there’s a gray area between misinformation and citizens exercising their First Amendment rights.
“You know, we’ve got a very diverse election system in this country,” Bowens said. “What was on that post may very well be true in another state. Therefore, is it misinformation?”
Technology
AI research takes a backseat to profits as Silicon Valley prioritizes products over safety, experts say
Sam Altman, co-founder and CEO of OpenAI and co-founder of Tools for Humanity, participates remotely in a discussion on the sidelines of the IMF/World Bank Spring Meetings in Washington, D.C., April 24, 2025.
Brendan Smialowski | AFP | Getty Images
Not long ago, Silicon Valley was where the world’s leading artificial intelligence experts went to perform cutting-edge research.
Meta, Google and OpenAI opened their wallets for top talent, giving researchers staff, computing power and plenty of flexibility. With the support of their employers, the researchers published high-quality academic papers, openly sharing their breakthroughs with peers in academia and at rival companies.
But that era has ended. Now, experts say, AI is all about the product.
Since OpenAI released ChatGPT in late 2022, the tech industry has shifted its focus to building consumer-ready AI services, in many cases prioritizing commercialization over research, AI researchers and experts in the field told CNBC. The profit potential is massive — some analysts predict $1 trillion in annual revenue by 2028. The prospective repercussions terrify the corner of the AI universe concerned about safety, industry experts said, particularly as leading players pursue artificial general intelligence, or AGI, which is technology that rivals or exceeds human intelligence.
In the race to stay competitive, tech companies are taking an increasing number of shortcuts when it comes to the rigorous safety testing of their AI models before they are released to the public, industry experts told CNBC.
James White, chief technology officer at cybersecurity startup CalypsoAI, said newer models are sacrificing security for quality, that is, better responses by the AI chatbots. That means they’re less likely to reject malicious kinds of prompts that could cause them to reveal ways to build bombs or sensitive information that hackers could exploit, White said.
“The models are getting better, but they’re also more likely to be good at bad stuff,” said White, whose company performs safety and security audits of popular models from Meta, Google, OpenAI and other companies. “It’s easier to trick them to do bad stuff.”
The changes are readily apparent at Meta and Alphabet, which have deprioritized their AI research labs, experts say. At Facebook’s parent company, the Fundamental Artificial Intelligence Research, or FAIR, unit has been sidelined by Meta GenAI, according to current and former employees. And at Alphabet, the research group Google Brain is now part of DeepMind, the division that leads development of AI products at the tech company.
CNBC spoke with more than a dozen AI professionals in Silicon Valley who collectively tell the story of a dramatic shift in the industry away from research and toward revenue-generating products. Some are former employees at the companies with direct knowledge of what they say is the prioritization of building new AI products at the expense of research and safety checks. They say employees face intensifying development timelines, reinforcing the idea that they can’t afford to fall behind when it comes to getting new models and products to market. Some of the people asked not to be named because they weren’t authorized to speak publicly on the matter.
Mark Zuckerberg, CEO of Meta Platforms, during the Meta Connect event in Menlo Park, California, on Sept. 25, 2024.
David Paul Morris | Bloomberg | Getty Images
Meta’s AI evolution
When Joelle Pineau, a Meta vice president and the head of the company’s FAIR division, announced in April that she would be leaving her post, many former employees said they weren’t surprised. They said they viewed it as solidifying the company’s move away from AI research and toward prioritizing developing practical products.
“Today, as the world undergoes significant change, as the race for AI accelerates, and as Meta prepares for its next chapter, it is time to create space for others to pursue the work,” Pineau wrote on LinkedIn, adding that she will formally leave the company May 30.
Pineau began leading FAIR in 2023. The unit was established a decade earlier to work on difficult computer science problems typically tackled by academia. Yann LeCun, one of the godfathers of modern AI, initially oversaw the project, and instilled the research methodologies he learned from his time at the pioneering AT&T Bell Laboratories, according to several former employees at Meta. Small research teams could work on a variety of bleeding-edge projects that may or may not pan out.
The shift began when Meta laid off 21,000 employees, or nearly a quarter of its workforce, starting in late 2022. CEO Mark Zuckerberg kicked off 2023 by calling it the “year of efficiency.” FAIR researchers, as part of the cost-cutting measures, were directed to work more closely with product teams, several former employees said.
Two months before Pineau’s announcement, one of FAIR’s directors, Kim Hazelwood, left the company, two people familiar with the matter said. Hazelwood helped oversee FAIR’s NextSys unit, which manages computing resources for FAIR researchers. Her role was eliminated as part of Meta’s plan to cut 5% of its workforce, the people said.
Joelle Pineau of Meta speaks at the Advancing Sustainable Development through Safe, Secure, and Trustworthy AI event at Grand Central Terminal in New York, Sept. 23, 2024.
Bryan R. Smith | Via Reuters
OpenAI’s 2022 launch of ChatGPT caught Meta off guard, creating a sense of urgency to pour more resources into large language models, or LLMs, that were captivating the tech industry, the people said.
In 2023, Meta began heavily pushing its freely available and open-source Llama family of AI models to compete with OpenAI, Google and others.
With Zuckerberg and other executives convinced that LLMs were game-changing technologies, management had less incentive to let FAIR researchers work on far-flung projects, several former employees said. That meant deprioritizing research that could be viewed as having no impact on Meta’s core business, such as FAIR’s previous health care-related research into using AI to improve drug therapies.
Since 2024, Meta Chief Product Officer Chris Cox has been overseeing FAIR as a way to bridge the gap between research and the product-focused GenAI group, people familiar with the matter said. The GenAI unit oversees the Llama family of AI models and the Meta AI digital assistant, the two most important pillars of Meta’s AI strategy.
Under Cox, the GenAI unit has been siphoning more computing resources and team members from FAIR due to its elevated status at Meta, the people said. Many researchers have transferred to GenAI or left the company entirely to launch their own research-focused startups or join rivals, several of the former employees said.
While Zuckerberg has some internal support for pushing the GenAI group to rapidly develop real-world products, there’s also concern among some staffers that Meta is now less able to develop industry-leading breakthroughs that can be derived from experimental work, former employees said. That leaves Meta to chase its rivals.
A high-profile example landed in January, when Chinese lab DeepSeek released its R1 model, catching Meta off guard. The startup claimed it was able to develop a model as capable as its American counterparts but with training at a fraction of the cost.
Meta quickly implemented some of DeepSeek’s innovative techniques for its Llama 4 family of AI models that were released in April, former employees said. The AI research community had a mixed reaction to the smaller versions of Llama 4, but Meta said the biggest and most powerful Llama 4 variant is still being trained.
The company in April also released security and safety tools for developers to use when building apps with Meta’s Llama 4 AI models. These tools help mitigate the chances of Llama 4 unintentionally leaking sensitive information or producing harmful content, Meta said.
“Our commitment to FAIR remains strong,” a Meta spokesperson told CNBC. “Our strategy and plans will not change as a result of recent developments.”
In a statement to CNBC, Pineau said she is enthusiastic about Meta’s overall AI work and strategy.
“There continues to be strong support for exploratory research and FAIR as a distinct organization in Meta,” Pineau said. “The time was simply right for me personally to re-focus my energy before jumping into a new adventure.”
Meta on Thursday named FAIR co-founder Rob Fergus as Pineau’s replacement. Fergus will return to the company to serve as a director at Meta and head of FAIR, according to his LinkedIn profile. He was most recently a research director at Google DeepMind.
“Meta’s commitment to FAIR and long term research remains unwavering,” Fergus said in a LinkedIn post. “We’re working towards building human-level experiences that transform the way we interact with technology and are dedicated to leading and advancing AI research.”
Demis Hassabis, co-founder and CEO of Google DeepMind, attends the Artificial Intelligence Action Summit at the Grand Palais in Paris, Feb. 10, 2025.
Benoit Tessier | Reuters
Google ‘can’t keep building nanny products’
Google released its latest and most powerful AI model, Gemini 2.5, in March. The company described it as “our most intelligent AI model,” and wrote in a March 25 blog post that its new models are “capable of reasoning through their thoughts before responding, resulting in enhanced performance and improved accuracy.”
For weeks, Gemini 2.5 was missing a model card, meaning Google did not share information about how the AI model worked or its limitations and potential dangers upon its release.
Model cards are a common tool for AI transparency.
A Google website compares model cards to food nutrition labels: They outline “the key facts about a model in a clear, digestible format,” the website says.
“By making this information easy to access, model cards support responsible AI development and the adoption of robust, industry-wide standards for broad transparency and evaluation practices,” the website says.
Google wrote in an April 2 blog post that it evaluates its “most advanced models, such as Gemini, for potential dangerous capabilities prior to their release.” Google later updated the blog to remove the words “prior to their release.”
Without a model card for Gemini 2.5, the public had no way of knowing which safety evaluations were conducted or whether DeepMind checked for dangerous capabilities at all.
In response to CNBC’s inquiry on April 2 about Gemini 2.5’s missing model card, a Google spokesperson said that a “tech report with additional safety information and model cards are forthcoming.” Google published an incomplete model card on April 16 and updated it on April 28, more than a month after the AI model’s release, to include information about Gemini 2.5’s “dangerous capability evaluations.”
Those assessments are important for gauging the safety of a model — whether people can use the models to learn how to build chemical or nuclear weapons or hack into important systems. These checks also determine whether a model is capable of autonomously replicating itself, which could lead to a company losing control of it. Running tests for those capabilities requires more time and resources than simple, automated safety evaluations, according to industry experts.
Google co-founder Sergey Brin
Kelly Sullivan | Getty Images Entertainment | Getty Images
The Financial Times in March reported that Google DeepMind CEO Demis Hassabis had installed a more rigorous vetting process for internal research papers to be published. The clampdown at Google is particularly notable because the company’s “Transformers” technology gained recognition across Silicon Valley through that type of shared research. Transformers were critical to OpenAI’s development of ChatGPT and the rise of generative AI.
Google co-founder Sergey Brin told staffers at DeepMind and Gemini in February that competition has accelerated and “the final race to AGI is afoot,” according to a memo viewed by CNBC. “We have all the ingredients to win this race but we are going to have to turbocharge our efforts,” he said in the memo.
Brin said in the memo that Google has to speed up the process of testing AI models, as the company needs “lots of ideas that we can test quickly.”
“We need real wins that scale,” Brin wrote.
In his memo, Brin also wrote that the company’s methods have “a habit of minor tweaking and overfitting” products for evaluations and “sniping” the products at checkpoints. He said employees need to build “capable products” and to “trust our users” more.
“We can’t keep building nanny products,” Brin wrote. “Our products are overrun with filters and punts of various kinds.”
A Google spokesperson told CNBC that the company has always been committed to advancing AI responsibly.
“We continue to do that through the safe development and deployment of our technology, and research contributions to the broader ecosystem,” the spokesperson said.
Sam Altman, CEO of OpenAI, is seen through glass during an event on the sidelines of the Artificial Intelligence Action Summit in Paris, Feb. 11, 2025.
Aurelien Morissard | Via Reuters
OpenAI’s rush through safety testing
The debate of product versus research is at the center of OpenAI’s existence. The company was founded as a nonprofit research lab in 2015 and is now in the midst of a contentious effort to transform into a for-profit entity.
That’s the direction co-founder and CEO Sam Altman has been pushing toward for years. On May 5, though, OpenAI bowed to pressure from civic leaders and former employees, announcing that its nonprofit would retain control of the company even as it restructures into a public benefit corporation.
Nisan Stiennon worked at OpenAI from 2018 to 2020 and was among a group of former employees urging California and Delaware not to approve OpenAI’s restructuring effort. “OpenAI may one day build technology that could get us all killed,” Stiennon wrote in a statement in April. “It is to OpenAI’s credit that it’s controlled by a nonprofit with a duty to humanity.”
But even with the nonprofit maintaining control and majority ownership, OpenAI is speedily working to commercialize products as competition heats up in generative AI. And it may have rushed the rollout of its o1 reasoning model last year, according to some portions of its model card.
Results of the model’s “preparedness evaluations,” the tests OpenAI runs to assess an AI model’s dangerous capabilities and other risks, were based on earlier versions of o1. They had not been run on the final version of the model, according to its model card, which is publicly available.
Johannes Heidecke, OpenAI’s head of safety systems, told CNBC in an interview that the company ran its preparedness evaluations on near-final versions of the o1 model. Minor variations to the model that took place after those tests wouldn’t have contributed to significant jumps in its intelligence or reasoning and thus wouldn’t require additional evaluations, he said. Still, Heidecke acknowledged that OpenAI missed an opportunity to more clearly explain the difference.
OpenAI’s newest reasoning model, o3, released in April, seems to hallucinate more than twice as often as o1, according to the model card. When an AI model hallucinates, it produces falsehoods or illogical information.
OpenAI has also been criticized for reportedly slashing safety testing times from months to days and for omitting the requirement to safety test fine-tuned models in its latest “Preparedness Framework.”
Heidecke said OpenAI has decreased the time needed for safety testing because the company has improved its testing effectiveness and efficiency. A company spokesperson said OpenAI has allocated more AI infrastructure and personnel to its safety testing, and has increased resources for paying experts and growing its network of external testers.
In April, the company shipped GPT-4.1, one of its new models, without a safety report, as the model was not designated by OpenAI as a “frontier model,” which is a term used by the tech industry to refer to a bleeding-edge, large-scale AI model.
But one of those small revisions caused a big wave in April. Within days of updating its GPT-4o model, OpenAI rolled back the changes after screenshots of overly flattering responses to ChatGPT users went viral online. OpenAI said in a blog post explaining its decision that those types of responses to user inquiries “raise safety concerns — including around issues like mental health, emotional over-reliance, or risky behavior.”
OpenAI said in the blogpost that it opted to release the model even after some expert testers flagged that its behavior “‘felt’ slightly off.”
“In the end, we decided to launch the model due to the positive signals from the users who tried out the model. Unfortunately, this was the wrong call,” OpenAI wrote. “Looking back, the qualitative assessments were hinting at something important, and we should’ve paid closer attention. They were picking up on a blind spot in our other evals and metrics.”
Metr, a company OpenAI partners with to test and evaluate its models for safety, said in a recent blog post that it was given less time to test the o3 and o4-mini models than predecessors.
“Limitations in this evaluation prevent us from making robust capability assessments,” Metr wrote, adding that the tests it did were “conducted in a relatively short time.”
Metr also wrote that it had insufficient access to data that would be important in determining the potential dangers of the two models.
The company said it wasn’t able to access the OpenAI models’ internal reasoning, which is “likely to contain important information for interpreting our results.” However, Metr said, “OpenAI shared helpful information on some of their own evaluation results.”
OpenAI’s spokesperson said the company is piloting secure ways of sharing chains of thought for Metr’s research as well as for other third-party organizations.
Steven Adler, a former safety researcher at OpenAI, told CNBC that safety testing a model before it’s rolled out is no longer enough to safeguard against potential dangers.
“You need to be vigilant before and during training to reduce the chance of creating a very capable, misaligned model in the first place,” Adler said.
He warned that companies such as OpenAI are backed into a corner when they create capable but misaligned models with goals that are different from the ones they intended to build.
“Unfortunately, we don’t yet have strong scientific knowledge for fixing these models — just ways of papering over the behavior,” Adler said.
WATCH: OpenAI closes $40 billion funding round, largest private tech deal on record
Omar Marques | Sopa Images | Lightrocket | Getty Images
Shares of stock brokerage platform eToro popped in their Nasdaq debut on Wednesday after the company raised almost $310 million in its initial public offering.
The stock opened at $69.69, or 34% above its IPO, pushing its market cap to $5.6 billion. Shares were last up more than 40%.
The Israel-based company sold nearly six million shares at $52 each, above the expected range of $46 to $50. Almost six million additional shares were sold by existing investors. At the IPO price, the company was valued at roughly $4.2 billion.
Wall Street is looking to the Robinhood competitor for signs of renewed interest in IPOs after an extended drought. Many investors saw President Donald Trump’s return to the White House as a catalyst before tariff concerns led companies to delay their plans.
Etoro isn’t the only company attempting to test the waters. Fintech company Chime filed its prospectus with the U.S. Securities and Exchange Commission on Tuesday, while digital physical therapy company Hinge Health kickstarted its IPO roadshow, and said in a filing it aims to raise up to $437 million in its offering.
EToro had previously filed to go public in 2021 through a merger with a special purpose acquisition company, or SPAC, that would have valued it at more than $10 billion. It shelved those plans in 2022 as equity markets nosedived, but remained focused on an eventual IPO.
EToro was founded in 2007 by brothers Yoni and Ronen Assia and David Ring. The company makes money through trading-related fees and nontrading activities such as withdrawals. Net income increased almost thirteenfold last year to $192.4 million from $15.3 million in 2023.
The company has steadily built a growing business in cryptocurrencies. Revenue from crypto assets more than tripled to upward of $12 million in 2024, and one-quarter of its net trading contribution stemmed from crypto last year. That is up from 10% in 2023.
EToro said that for the first quarter, it expects crypto assets to account for 37% of its commission from trading activities, down from 43% a year earlier.
Spark Capital is the company’s biggest outside investor, with 14% control after the offering, followed by BRM Group at 8.7%. CEO Yoni Assia controls 9.3%.
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