eToro Launches AI-First App, But Core Crypto Dependency Unchanged

What happened

eToro unveiled a new AI-first mobile app at its 'Intelligence in Motion' event in London, aiming to enhance social and smart trading features. The app represents a continued product investment to deepen user engagement and differentiate in a competitive retail brokerage space. However, over 90% of eToro's revenue remains tied to crypto trading, and recent November metrics showed crypto trade counts and ticket sizes halving year-over-year. The stock has fallen 38% from its IPO price, and the base case valuation of $38 offers moderate upside, but a bear case of $22 is plausible if crypto activity remains soft. While the new app could support user growth and stickiness, it does not alter the fundamental vulnerability to crypto cycles.

Implication

eToro's new app is a positive product move but does not change the WAIT framework. The stock remains heavily leveraged to crypto trading, and until non-crypto income scales meaningfully, earnings volatility persists. Investors should require at least 1-2 quarters of data confirming margin resilience and mix shift toward interest-income and equities trading before adding exposure. The attractive entry point remains near $28, with trimming above $45.

Thesis delta

The new app launch supports user engagement and growth, but it does not address the core thesis concern: the revenue base remains >90% crypto-driven and highly cyclical. The thesis remains unchanged: wait for evidence that recent declines in crypto volumes are transitory and that diversification is gaining traction.