Investors
gave eToro Group (NASDAQ: ETOR)
a quick double-take yesterday (Tuesday). Pre-market shares climbed roughly 6%
to $41.20 on a 35% earnings beat, then reversed once the conference call
started, dropping more than 6% intraday before settling at $37.61, a 3% loss
for the session.

The Q1
numbers were a clean beat on the headline figures, with adjusted EPS of $0.91
against a $0.69 consensus and net contribution up 19% year-over-year to $258
million. Assets under management declined quarter over quarter, while average
trade sizes shrank by nearly 50% year over year.

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The Q1
figures FinanceMagnates.com reported yesterday showed net income up 37% on a
near-fourfold surge in commodities trading. CEO Yoni Assia opened the analyst
call by calling it the “fourth consecutive strong quarter since becoming a
public listing.”

Technically, the stock still sits near the local highs it has drawn for about a month,
levels last seen in December 2025. But the price action puts the shares more
than 40% below the $67 first-day close eToro registered on its May 2025 Nasdaq
debut, and roughly 28% below the $52 IPO offer price.

The eToro’s AUA Number
Investors Won’t Headline

eToro’s
earnings deck leads with “AUA grew 15% YoY to $17 billion.” Three
quarters back, the same chart tells a different story.

Source:
eToro shareholder update, May 12, 2026.

That is
$3.8 billion in client assets that have walked off the platform or depreciated
since the September peak, a sequential erosion of 18% over two quarters. April
rebounded to $18.7 billion in the monthly KPI release, but eToro is still
trading well below the Q3 high.

The press
release frames the story through the year-over-year lens, which works because
Q1 2025 was a weak comparable.

The drag is
concentrated in one place. Crypto assets held on the platform fell from $7.8
billion at the end of Q3 2025 to $4.1 billion at the end of March, a 47%
decline in two quarters.

Equity AUA
has climbed in the same window, from $6.5 billion to $9.3 billion, but the
offset has not been enough to keep the total rising.

Assia
framed the crypto decline as opportunity rather than risk, telling analysts
that “crypto downtimes are the time to build.” The framing tracks
with eToro’s February pivot story, but the underlying asset retention
question keeps surfacing.

Margin Math the Call
Surfaced

CFO Meron
Shani told analysts the company will scale selling and marketing spend from 22%
of net contribution in Q1 to 25% by year-end 2026, repeating the commitment
first made on the Q4 2025 call in February.

At Q1 net
contribution of $258 million, every percentage point added is roughly $2.6
million in incremental quarterly marketing. Shani also confirmed adjusted
operating expenses rose 7% sequentially, with a $12 million step-up in customer
acquisition costs the main driver.

Asked about
Q2 trends, Shani said the company expects revenue per trade to be “just
slightly above the range” of 60 to 75 cents the company normally guides
to, a step down from the elevated Q1 print that commodities trading powered.

Net trading
contribution from crypto was $13 million in Q1, with Shani specifying that the
figure includes a $5 million negative valuation impact on eToro’s own corporate
crypto holdings.

Strip that
out and the underlying user-driven crypto trading business contributed $18
million, less than half the level reported a year ago.

Average Trade Size
Collapsed

The Q1
invested amount per capital markets trade was $197, down from $304 in Q4 2025
and from $262 a year earlier. April held flat at $197 against $379 in April
2025, a 48% year-over-year drop.

eToro
attributes the trend to a higher mix of copy and automated trading, but the
figure is also consistent with retail clients trading leveraged commodity CFDs
rather than larger directional cash positions.

The balance
sheet hints at the same shift. Counterparty balances, which represent
collateral posted with trading counterparties on the hedging side of the book,
rose 39% in the quarter to $347 million from $249 million at the end of
December.

For comparison,
XTB delivered an 88% revenue jump on 370,000 new clients in a single
quarter, while Plus500
lifted its full-year 2026 outlook on $242 million in Q1 revenue.

This article was written by Damian Chmiel at www.financemagnates.com.

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