The Israeli brokerage company eToro actively attracts the attention of investors with flashy advertisements and offers on social stock trading without commissions. However, the well-known Financial Times investigated and found a mismatch between promises and reality.
The broker ran ads on YouTube and even involved famous people (like Alec Baldwin) to promote its services. Despite the claimed lack of commission, eToro’s Q1 2021 financial results report shows the following information:
For the first quarter of 2021, the company earned 141% more on commissions than it did in the first quarter of 2020 – $347 million.
Management notes that in the first quarter of this year, the number of new clients exceeded 3 million. This was one of the reasons for the dramatic increase in commission profits. Given the information from the press release, we can conclude that the broker does not stick to its promises of no interest. So, if an investor uses leverage or wants to switch from trading stocks to trading cryptocurrencies/CFD, he will have to pay a commission.
It is noteworthy that despite the high income from commissions, the company’s profits in Q1 2021 decreased by about 90 percent. The broker explains this situation by the cost of the marketing campaign.