Etoro (NASDAQ: ETOR) stock is falling this week despite a better-than-expected second-quarter report. The trading platform specialist's share price was down 17.9% in the week's trading heading into Friday's market open. Etoro published its Q2 results on Aug. 11 and reported sales and earnings for the period that topped Wall Street's forecasts.
On the other hand, investors are taking a cautious approach to the company's near-term outlook and to the announcement of a significant acquisition. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Etoro recorded non-GAAP (adjusted) earnings of $0.68 per share on sales of $229 million in the second quarter. The average analyst estimate called for adjusted earnings per share of $0.61 on revenue of roughly $225.7 million.
Revenue in the period was up 9% year over year, and adjusted income increased roughly 17% to $63 million. With its Q2 report, Etoro announced that it will be buying U.S. trading platform TradeZero in a $231 million deal. Investors and analysts appear to be split on the value of the move, and multiple investment firms noted some uncertainty surrounding the deal as a factor in lowering their price targets on the stock.
Additionally, some analysts were concerned about the key performance metrics that the company shared for July. While funded accounts rose 18% year over year in the month to reach 4.32 million, assets under administration declined 5% year over year to $18.5 billion. Cryptocurrency activity saw substantial drawdowns, and trading activity for capital markets and equities, commodities, and currencies was flat.
With trading momentum on the platform decelerating and some questions about the TradeZero acquisition, Etoro could remain under pressure in the near term. Before you buy stock in eToro Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and eToro Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
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