eToro (ETOR) shares dropped more than 11% during Tuesday trading after the social trading and multi-asset brokerage reported Q2 2026 earnings that fell short of Wall Street expectations and announced a major acquisition that amplified investor concerns.

The stock was already sliding approximately 4.4% in pre-market activity after the company posted adjusted diluted EPS of $0.68, topping the consensus estimate of $0.61. However, net profit of $53 million came in below the $55.1 million analysts had projected. For context, eToro earned $30 million in net profit in Q2 2025, representing 77% year-over-year growth — but markets had priced in a stronger result, and the reaction was immediate.

eToro $ETOR to acquire TradeZero for up to $231M in cash and stock, expanding its U.S. brokerage business. TradeZero generated ~$80M in revenue at 81% gross margins over the past 12 months. eToro expects the deal to be accretive to adjusted EPS in the first year after closing. pic.twitter.com/Uqg4MDn26L — Wall St Engine (@wallstengine) August 11, 2026

TradeZero Acquisition Adds to Selling Pressure

Alongside the earnings release, eToro announced it has agreed to acquire TradeZero, a U.S.-focused brokerage serving active traders. The deal is valued at up to $231 million, funded through a combination of cash and up to 2.5 million newly issued Class A eToro shares. The share issuance raised immediate dilution concerns, compounding the selling pressure from the earnings miss.

TradeZero generated approximately $80 million in revenue at 81% gross margins over the past 12 months. The acquisition will also give eToro entry into the Canadian market. The transaction is expected to close in H1 2027, pending regulatory approval.

CEO Yoni Assia framed the deal as a catalyst for accelerating U.S. product development. "This combination gives us a faster path to launching new products for U.S. customers and strengthens our offering," he said. The deal comes as eToro has been working to deepen its U.S. footprint against entrenched competitors like Robinhood and Webull, which dominate the retail active-trading segment.

The TradeZero agreement marks eToro's third acquisition signed in 2026, prompting investor questions about the pace at which the company is deploying capital.

Crypto Trading Decline Pressures Revenue

On the operating side, eToro's funded accounts rose 18% year over year to 4.28 million, and assets under administration grew 10% to $19.2 billion. Net contribution increased 9% year over year to $229 million, though that represented a deceleration from Q1 momentum.

Crypto trading, however, weighed on results. In July 2026, total crypto trades fell to 1.4 million, down 73% year over year. The average invested amount per trade declined 50% to $182. The iShares Bitcoin Trust ETF has dropped 46% over the past 12 months, reflecting a broader crypto downturn that has affected eToro's business.

The broader equity market was not a factor in the selloff. The S&P 500 gained 0.2% and the Nasdaq rose 0.4% on Tuesday, confirming the decline was specific to eToro.

eToro said it expects the TradeZero acquisition to be accretive to adjusted EPS in the first year after closing.