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eToro dives into options and PFOF with Gatsby deal

Lucinda Shen
Aug 17, 2022
Two hands shaking.

eToro, an Israel-based stock and crypto-trading platform, has agreed to acquire Gatsby, a Robinhood competitor, for $50 million in cash and stock.

Why it matters: This deal pulls eToro deeper into the U.S. market and allows the company to offer options trading — the largest source of revenue for Robinhood.

Details: eToro will be able to offer options "in a faster manner, and potentially globally," strategy and corporate development VP Elad Lavi tells Axios. "The more assets you can provide, the more it increases customer retention."

Of note: Gatsby earns revenue through "payments for order flow," a controversial practice and a core breadwinner for Robinhood and many of its U.S.-based competitors.

  • This also marks eToro's entrance into the PFOF market, as eToro primarily operates outside the U.S., where the practice is less common.

Context: The deal comes as trading revenues are taking a hit across the sector.

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