Key Takeaways
- eToro is purchasing cryptocurrency wallet company Zengo for approximately $70 million
- Zengo employs multi-party computation (MPC) technology, eliminating seed phrase requirements
- The acquisition is designed to integrate self-custody capabilities and decentralized trading features into eToro’s ecosystem
- ETOR stock has declined more than 1% year-to-date and approximately 48% over the trailing twelve months
- Citizens analyst Devin Ryan reduced his price target to $85 while maintaining a view of ~145% potential upside
On Wednesday, eToro (ETOR) revealed plans to acquire Zengo, a cryptocurrency wallet service provider, in a transaction valued at approximately $70 million according to reports. Shares experienced a modest uptick following the announcement.
Established in 2018, Zengo has accumulated over 2 million users worldwide. The platform provides a non-custodial wallet solution, enabling users to maintain direct control over their digital assets without intermediary involvement.
Zengo leverages multi-party computation (MPC) technology to safeguard user funds without requiring traditional seed phrases. This architecture aims to minimize risks associated with lost or compromised private keys — a persistent challenge in self-custodial cryptocurrency management.
The transaction encompasses existing Zengo features including token swaps, staking capabilities, and fiat-to-crypto onramps. Zengo’s wallet will continue operating independently from eToro’s regulated offerings, allowing users to engage directly with decentralized protocols.
eToro’s CEO and co-founder Yoni Assia emphasized the strategic timing. “As we often say, crypto downtimes are the time to build and this acquisition reflects that long-term approach,” he stated.
According to the announcement, the acquisition will enable eToro to better support emerging cryptocurrency applications — particularly tokenized assets, prediction markets, and perpetual futures contracts. The company intends to incorporate Zengo’s underlying technology into its existing platform architecture.
“[The acquisition] will strengthen our ability to support evolving digital asset use cases, including tokenized assets and emerging decentralized trading models,” eToro indicated in an official statement.
This acquisition follows closely on the heels of eToro’s app store launch announced just one day prior, which provides investors and developers with infrastructure to create and utilize trading and analytics applications directly within the eToro ecosystem. ETOR shares climbed over 4% following that earlier announcement.
ETOR Stock Performance Struggles Over Past Year
Notwithstanding recent corporate developments, the stock has experienced significant headwinds. ETOR shares have dropped more than 1% since the beginning of the year and roughly 48% over the past twelve months.
Last week, Devin Ryan from Citizens adjusted his price target on ETOR downward to $85 from a higher previous estimate, though this still suggests approximately 145% upside potential from current trading levels. Ryan noted that “navigating volatility remains the central challenge” for capital markets and fintech firms, adding that cryptocurrency sentiment “remains impaired” in the near-term.
These headwinds were evident in eToro’s fourth-quarter financial results. Digital asset revenue contracted 38% during the quarter that concluded on December 31. Nevertheless, the company reported quarterly earnings of $69 million, representing a year-over-year increase of approximately 16%.
Wall Street’s Current View
Among Wall Street analysts, the consensus rating on ETOR is a Moderate Buy, supported by seven Buy recommendations and three Hold ratings issued over the most recent three-month period.
The mean price target among analysts stands at $52.80, suggesting roughly 52% upside potential from present price levels.
The Zengo transaction remains contingent upon satisfaction of standard closing conditions. While eToro has not publicly verified the $70 million valuation, Bloomberg reported the figure based on information from a source familiar with the transaction.
