ETOR Stock Jumps On $70 Million Crypto Wallet Deal, On Track For 3-Day Winning Streak

• eToro Group shares edged higher following the announcement of a $70 million acquisition of crypto wallet provider Zengo.
• The acquisition aims to enhance eToro's offerings by integrating Zengo's keyless wallet technology, improving user safety, and easing the management of crypto assets.
• The Securities and Exchange Commission also approved a plan to remove day-trading limits for investors, which could lead to an increase in day trading volumes for smaller account traders to trade more actively, according to Goldman Sachs.

Shares of eToro Group Ltd. (ETOR) rose more than 6% on Wednesday, after the firm announced that it would buy Zengo, a crypto wallet provider, for $70 million.

The company said it wants to go beyond trading and into on-chain infrastructure and self-custody solutions. The partnership introduces Zengo's keyless wallet technology, which is based on multi-party computation (MPC), into eToro's ecosystem. This makes it safer and easier for users to keep crypto assets.

Zengo, which started in 2018, is a full-service crypto wallet that lets you swap tokens, stake them, and use decentralized apps. The connection could provide eToro users with more access to new ways to use cryptocurrency, like tokenized assets, decentralized trading, and products that make money.

The acquisition fits with eToro's long-term plan to connect the old financial world with the crypto-native economy, but users won't see any changes right away. 

ETOR Stock On Track For Three-Day Rally

eToro’s stock was trading over $36 in afternoon trade, on track for a three-day rally which has led the stock back to three-month highs. On Stocktwits, retail sentiment around ETOR improved to ‘bullish’ from the ‘bearish’ zone, while chatter around it rose to ‘high’ from the ‘normal’ zone over the past day. 

In addition to the new partnership, the uptick in ETOR’s stock came after the Securities and Exchange Commission (SEC) approved a plan to remove day-trading limits for investors. According to Goldman Sachs, this could lead to an increase in day trading volumes for smaller account traders to trade more actively.

Meanwhile, Citizens JMP reportedly lowered its price target on ETOR’s stock to $85 from $90 but kept a ‘Market Outperform’ rating.The analyst said large-cap financials remain durable, despite mounting valuation concerns. In contrast, he cited retail brokers and wealth platforms as examples of recent sell-offs that appear overdone in terms of fundamentals.

The firm used Robinhood (HOOD) as an example, stating that the stock has declined about 50% in six months despite reporting 52% revenue growth and remaining profitable.

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