Cathie Wood Sees Opportunity In eToro As Crypto Trading Cools And Wall Street Cuts Price Target

• ARK Invest bought 33,241 shares in eToro worth around $698,000 through its ARKF fund.
• eToro’s net contribution fell 13%, with crypto trading down 62% year-over-year.
• Funded accounts were up 18%, but the platform kept adding to its user base nonetheless.

Cathie Wood's ARK Invest bought shares in eToro (ETOR) on Tuesday, after the company posted third-quarter results that fell short of estimates and led Goldman Sachs to cut its price target.

ARK's Fintech Innovation ETF (ARKF) bought 33,241 shares of eToro, according to Ark Invest’s daily trade disclosure. The purchase was worth about $698,000 at Tuesday's close of $21. 

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ETOR stock was up over 1% in overnight trading, after closing over 7% lower on Tuesday. On Stocktwits, retail sentiment around ETOR improved to ‘bullish’ from the ‘bearish’ zone, as chatter increased to ‘high’ from ‘normal’ levels over the past day. 

In the same trading session, ARK also sold 15,609 shares of crypto exchange Bullish (BLSH) and 2,107 shares of Palantir Technologies (PLTR) and increased its position in Archer Aviation (ACHR) and Rocket Lab (RKLB) across its funds. The firm also sold 35,000 shares of Block Inc (XYZ) on the same day.

Crypto Slowdown Weighs On Results

eToro's net contribution, its primary revenue measure, fell 13% to $186.30 million for the quarter ended Sept. 30, 0.05% below analysts' estimate of $186.4 million, according to Koyfin. Net income dropped 74% to about $15 million. Adjusted earnings were $0.26 per share, compared with $0.60 a year earlier. Analysts were looking for adjusted earnings of $0.28 a share. 

Crypto activity also took a nosedive. Crypto trades in October were 62% lower than a year ago, the company said. The average amount invested per crypto trade fell by 29% to $228. The platform still expanded its user base, with funded accounts up 18% to 4.39 million. 

The company also said the eToro board approved a buyback of up to $250 million of its shares. While the company did not set a timeline, it added that the pace of purchases would be dependent on its share price, market conditions, and other factors.

CEO Yoni Assia pointed to the launch of the new eToro app during the quarter. It was “built from the ground up with AI at its core,” he said, and it was allowing the company “to ship products faster to our global community."

Goldman Gets More Cautious

Following the results, Goldman Sachs cut its price target on eToro to $25 from $29 and kept its ‘Neutral’ rating on the stock, according to TheFly. The bank pointed to weaker crypto markets and the earnings miss. 

Goldman also lowered its fourth-quarter earnings estimate by $0.03 to $0.64 per share for eToro, TheFly reported. It cited losses on about $20 million worth of corporate crypto holdings at eToro and lower crypto prices.

The stock is down more than 38% so far this year. 

Read more: Bitcoin Nears $74K: Van De Poppe Sees Buying Opportunity, Peter Schiff Warns Of Historic Losses

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