eToro Stock Falls 14% After Crypto Division Posts Second-Quarter Loss

eToro stock dropped 14% after the trading platform reported that its crypto business recorded a loss in the second quarter of 2026. This came even as the company's overall results beat Wall Street estimates.

The Tel Aviv-based platform said its crypto trading arm lost $7.2 million during the quarter. This is a decline of almost 120% from the $37.7 million it earned in the same period a year earlier.

eToro stock drops despite overall earnings beat

The Q2 loss affected the stock even before the broader results were digested. Crypto revenue came in at $1.35 billion, down 29% from $1.91 billion a year earlier. The cost of revenue from crypto assets also topped $1.35 billion, which basically wiped out the segment's profit entirely.

Trading activity also fell along with the revenue decline. The company saw 1.4 million crypto trades in July, down 73% when compared to the previous year.  

The average size of each crypto trade fell 50% to $182. Crypto's share of total trading commissions also shrank to just 11% in the second quarter from about 50% in the fourth quarter of 2024.

But even with this, eToro's other businesses held up well. Net income for the quarter hit $53 million, and adjusted diluted earnings per share came in at $0.68. This beat analyst estimates of $0.61. 

Net contribution rose 9% year over year to $229 million, thanks to equity trading. Funded accounts also grew 18% to 4.28 million. Adjusted EBITDA rose 9% to $78 million, slightly ahead of consensus forecasts.

Stock trading has picked up the slack left by crypto. Commissions from stock trading rose to about 60% of the company's commissions in the second quarter, up from 25% at the end of 2024. This was supported by $141 million in net trading income from stocks and commodities. 

Chief Financial Officer Meron Shani highlighted the overlap between asset classes. He noted that a large share of users who traded commodities earlier went on to trade stocks. Shani also added that at least nine out of ten of them traded crypto on the platform.

Despite the earnings beat, eToro stock has still struggled over the past week. Investment firm Citizens, however, maintained a Market Outperform rating and a $90 price target on the stock. They said that the main business is still strong despite the crypto pullback.

TradeZero deal marks eToro's push into U.S. equities

In a press release, eToro announced an agreement to buy TradeZero, a U.S. brokerage offering commission-free stock and options trading. The deal was reportedly worth $231 million in cash and newly issued shares. 

The deal is expected to close in the first half of 2027, while they await regulatory approval.

TradeZero was founded in 2015 and operates in the U.S. and Canada. The firm saw $80 million in revenue over the past twelve months, with gross margins of 81%. 

Co-founder and CEO Yoni Assia said the deal gives the firm an opening for new US products.

"This combination gives us a faster path to launching new products for US customers and strengthens our offering. Together, we'll innovate faster as we continue building the global financial superapp for the next generation of users."

The buy comes as the company's crypto offering in the U.S. stays limited. Before now, American users could only trade Bitcoin, Ethereum, and Bitcoin Cash on the platform.