Jim Cramer Says eToro's "Profitability is Nearly as Good as Robinhood's"

eToro Group Ltd. (NASDAQ:ETOR) is one of the 18 stocks Jim Cramer recently shared insights on. During the episode, Cramer mentioned the company and said:

“Alright, about a month later… another really popular trading platform, this one’s called eToro, debuted on the Nasdaq with a traditional IPO, and the market lapped it up… So, how do these three brokerages, the platforms, stack up against each other? First, let’s take scale because scale is often what dictates what’s going to win in a brokerage area. At the end of the first quarter… eToro had just 3.58 million funded accounts with 14.8 billion in assets under administration… Webull and eToro are roughly the same size… Now, what about the financials? We just want to look at revenue growth and some measures of profitability. But comparing the three companies… is surprisingly challenging because they all use different key metrics… But for eToro, we have to use the company’s net contribution, which is similar to the net revenue numbers from the other two… eToro has slower growth but much better profitability than Webull…

And for eToro, what we see is a big improvement in the financial results last year, especially on the profitability front, which makes sense as the company has said outright that it’s changed the strategy after its failed deal to come public a few years ago. In the first quarter of this year, though revenue growth slowed significantly and the company’s profitability even regressed…

Now this, eToro, the obvious number two, profitability is nearly as good as Robinhood’s, even if the growth is slower… So Robin and eToro are the only two I’d even consider. Robin has a better business, but eToro has a much cheaper stock, selling for 27 times this year’s earnings estimates, basically half of Robinhood’s valuation of 55 times earnings… On the other hand, eToro got pulverized today after it reported what I thought was a good quarter, in part because the stock had already run up dramatically from where it came public.”

eToro (NASDAQ:ETOR) operates a multi-asset trading platform that offers access to equities, crypto assets, commodities, currencies, and options. The company also provides investment tools, educational resources, and financial services to improve users’ trading and money management experience.

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