Key Highlights
- eToro finalized an acquisition agreement for Zengo, a cryptocurrency wallet startup, valued at approximately $70 million
- Zengo employs multi-party computation (MPC) security protocols, eliminating traditional seed phrase requirements
- The acquisition strategy focuses on expanding self-custody capabilities and decentralized trading features for eToro users
- ETOR shares have declined more than 1% so far this year and approximately 48% over the trailing twelve-month period
- Citizens financial analyst Devin Ryan adjusted his price target downward to $85 while maintaining significant upside potential of ~145%
On Wednesday, eToro (ETOR) revealed its agreement to purchase Zengo, a cryptocurrency wallet service provider, in a transaction valued at approximately $70 million according to industry sources. Shares experienced a slight uptick following the announcement.
Established in 2018, Zengo has accumulated a global customer base exceeding 2 million users. The platform provides a non-custodial wallet solution, enabling users to maintain complete control over their digital assets without depending on third-party custodians.
Zengo’s infrastructure leverages multi-party computation (MPC) technology to safeguard user funds while eliminating the traditional seed phrase requirement. This architectural approach addresses a major pain point in cryptocurrency self-custody: the risk of misplaced or compromised recovery keys.
The acquisition encompasses Zengo’s existing feature set, including token exchange functionality, staking capabilities, and fiat currency onramp services. Zengo’s wallet infrastructure will operate independently from eToro’s regulated financial services, enabling users to engage directly with decentralized protocols and third-party platforms.
eToro’s CEO and co-founder Yoni Assia emphasized the strategic timing behind the move. “As we often say, crypto downtimes are the time to build and this acquisition reflects that long-term approach,” he stated.
According to company statements, the acquisition positions eToro to better serve emerging cryptocurrency applications, particularly tokenized real-world assets, prediction market platforms, and perpetual futures contracts. The trading platform intends to embed Zengo’s technological infrastructure throughout its existing ecosystem.
“[The acquisition] will strengthen our ability to support evolving digital asset use cases, including tokenized assets and emerging decentralized trading models,” eToro announced in an official statement.
The Zengo purchase follows closely behind eToro’s Tuesday launch of its proprietary app marketplace, which provides investors and third-party developers with a platform to create and access trading tools, analytical resources, and investment utilities. Following that unveiling, ETOR shares climbed more than 4% at market close.
ETOR Stock Performance Remains Under Pressure
Notwithstanding recent corporate developments, the stock has experienced significant headwinds. ETOR shares have declined over 1% since January and have fallen approximately 48% during the past twelve months.
Citizens analyst Devin Ryan recently revised his price projection on ETOR to $85 from a higher previous target, though this still represents approximately 145% potential appreciation from current trading levels. Ryan noted that “navigating volatility remains the central challenge” facing capital markets and financial technology firms, while observing that cryptocurrency market sentiment “remains impaired” in the near term.
These market dynamics were reflected in eToro’s fourth-quarter financial performance. Revenue from digital asset trading declined 38% during the quarter concluded December 31. Nevertheless, the company delivered quarterly earnings of $69 million, representing approximately 16% growth compared to the same period one year earlier.
Analyst Sentiment and Price Projections
Wall Street’s consensus rating for ETOR stands at Moderate Buy, derived from seven Buy recommendations and three Hold ratings issued within the last three months.
The mean analyst price target reaches $52.80, suggesting roughly 52% appreciation potential from present valuation levels.
The Zengo transaction remains pending fulfillment of standard closing requirements. While eToro has not publicly verified the $70 million purchase price, Bloomberg reported the figure based on information from a source familiar with the transaction terms.
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