eToro Q2 Crypto Loss Masks Record Profit and TradeZero Deal

Woofun AI reports that eToro's Q2 2026 earnings revealed a stark divergence between its struggling crypto segment and record overall profitability, underscored by the announcement of a major strategic acquisition. While the company posted adjusted diluted earnings per share of $0.68, beating analysts' estimates of $0.61, the underlying crypto business posted a $7.2 million loss, contrasting sharply with the broader financial success and the newly disclosed deal for TradeZero.

The Tel Aviv, Israel-based platform released its Tuesday earnings showing that cryptoasset revenue fell 29% year over year to $1.35 billion from $1.91 billion. With cost of revenue matching the $1.35 billion intake, the segment swung to a $7.2 million loss from a $37.7 million gain a year earlier, representing a 120% decline.

Woofun AI data shows this margin compression coincided with a sharp drop in user activity, as July crypto trades plummeted 73% to 1.4 million and average trade size halved to $182. Despite the crypto slump, the company's net contribution rose 9% year over year to $229 million, driven primarily by equity trading, while funded accounts increased 18% to 4.28 million.

Market reaction remained negative despite the earnings beat, with shares falling as much as 11% and trading 12% lower at $29.80 following the release. The stock decline occurred even as eToro highlighted future growth vectors, including the development of onchain perpetual futures and a 'coming soon' crypto buying power feature. The disconnect between the strong EPS beat and the share price drop suggests investors are weighing the immediate crypto headwinds against the long-term strategic shift signaled by the new acquisition.

eToro agreed to acquire U.S. brokerage firm TradeZero for up to $231 million in cash and stock, a deal expected to close in the first half of 2027 pending regulatory approvals. TradeZero, which generated $80 million in revenue in the 12 months through June, offers commission-free U.S. stock and options trading along with tools for short sellers, with no disclosed plans for crypto or blockchain integration. This marks eToro's third signed acquisition this year, reinforcing a clear pivot toward traditional U.S. brokerage distribution rather than digital asset innovation.