eToro’s shares (ETOR) rose marginally early Wednesday despite the Israeli social trading and investment platform announcing an agreement to take over crypto wallet startup Zengo. The deal is worth about $70 million, an insider told Bloomberg.
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Zengo, founded in 2018, offers self-custody services for crypto assets. The startup operates a multi-party computation system in which two or more key shares are held by different parties to enhance security and protect against hackers.
eToro to Boost Platform with Zengo Acquisition
eToro, in a statement, said the acquisition will enable the company to strengthen its digital asset capabilities while supporting Zengo’s growth. The trading company plans to integrate Zengo’s technology into its platform in the future to offer various decentralized products.
“[The acquisition] will strengthen our ability to support evolving digital asset use cases, including tokenized assets and emerging decentralized trading models such as prediction markets and perpetuals, as these markets develop,” eToro said in a statement.
‘Navigating Volatility Remains the Central Challenge’
The announcement comes a day after eToro launched its app store, providing a venue for investors and developers to build, share, and access trading and analytics applications directly within its platform. ETOR closed over 4% higher following the launch.
However, the company’s shares are down over 1% year-to-date and about 48% over the last 12 months. Last week, Citizens analyst Devin Ryan lowered his ETOR price target to $85, implying about 145% upside.
Ryan noted that “navigating volatility remains the central challenge” for capital markets and fintech companies, adding that crypto sentiment “remains impaired” in the short-term.
The pressure on crypto prices sank eToro’s digital asset revenue by 38% during its fourth-quarter that ended on December 31. However, the trading platform still managed to hit a quarterly profit of $69 million, up about 16% from the same period last year.
Is eToro Stock a Good Buy?
Across Wall Street, eToro’s shares continue to carry a Moderate Buy consensus rating from analysts. This is based on seven Buys and three Holds issued over the past three months.
However, the average ETOR price target of $52.80 suggests about 52% upside from current trading levels.
