eToro Beat Wall Street's Earnings Estimates — So Why Did the Stock Drop 10 Percent in a Single Morning?

Shares cratered 10% to $30.59 on Tuesday as investors looked past a strong second-quarter profit report and zeroed in on a staggering collapse in crypto trading activity. eToro posted adjusted earnings of $0.68 per share, beating the consensus estimate of $0.61 by more than 11%. But the headline numbers masked a problem that has now rattled the stock twice this year: when crypto trading dries up, the market punishes eToro regardless of what the rest of the business does.

Crypto Trades Fell Off a Cliff, and Investors Can't Ignore the Pattern. Total cryptocurrency trades fell to 1.4 million in July, a 73% year-over-year decrease, and the amount invested in crypto dropped by roughly half. This is not new. eToro doubled down on crypto even as Q1 digital-asset activity weakened, with crypto revenue dropping 38% in that quarter. The deterioration from a 32% decline in April to 73% by July signals accelerating weakness — exactly the trajectory that spooks investors who worry eToro's revenue is hostage to crypto sentiment. Bitcoin's decline has been driven by ETF outflows, Fed hawkishness, and capital rotating from crypto into AI stocks.

The Earnings Beat Was Real, But Built on Equities, Not Growth. Net contribution — essentially the revenue eToro keeps after paying trading costs — rose 9% year over year to $229 million, driven primarily by increased equities trading activity.

GAAP net income jumped 77% to $53 million.

Funded accounts climbed 18% to 4.32 million. These are solid numbers, but the market is pricing in the risk that equity trading alone can't replace crypto's contribution when digital-asset markets eventually rebound — or, worse, if they don't.

A $231 Million Bet on the U.S. Looks Smart but Won't Fix This Quarter. eToro agreed to acquire TradeZero, a U.S.-focused brokerage for active traders, in a deal valued at up to $231 million.

TradeZero generated roughly $80 million in revenue with an 81% gross margin.

The deal is expected to add to adjusted earnings per share in its first full year. But closing requires regulatory approval and isn't expected until the first half of 2027 — meaning it offers no near-term relief for a stock that has now fallen over 38% in the past year .

The Bottom Line. Fifteen analysts still rate ETOR a "Buy" with an average price target of $56.93 — roughly double today's price. That gap tells you Wall Street believes the crypto downturn is cyclical. Tuesday's selloff tells you the market isn't willing to wait.