eToro stock: why is trading platform struggling with user growth?

eToro Group (ETOR) is up nearly 20% this morning after the Israel-based online trading platform reported better-than-expected earnings for its fourth financial quarter.  

Beneath this headline strength, however, a concerning shift seems to be brewing – eToro’s growth in funded accounts “cooled off” to about 9.5% in fiscal Q4 from an average of 15% earlier in 2025.

This resulted in a 10% year-on-year decline in net contribution, while adjusted EBITDA also tanked $21 million from last year’s $108 million.

Zooming out, the deceleration in active user expansion can be attributed to three major factors that together make eToro stock less attractive even at a seemingly modest forward earnings multiple of about 11x.  

Market normalization decelerated user growth at eToro

In the first half of 2025, eToro benefited from a massive visibility boost following its initial public offering (IPO) and the strategic acquisition of an Australian investing app – Spaceship.

These events created a “sugar high” of inorganic growth, bringing in a flood of new users. But the Q4 release confirms this surge has now reached its natural plateau.

The integration of the Spaceship user base has been completed, meaning the low-hanging fruit of the Australian market has been picked.

For investors, this normalization may be concerning given ETOR stock’s forward multiple – while modest for a fintech name, is predicated on the expectation of high-velocity growth.

Now that growth has cooled to single digits, the market may stop viewing eToro as a disruptive, high-growth tech play and start pricing it as a mature cyclical brokerage.

This could make it increasingly difficult for the company’s share price to push meaningfully higher in 2026.

Rising competition is an overhang on eToro stock

eToro’s deceleration was specifically aggravated by “feature poaching” from its biggest rivals, who have replicated its most distinctive features like social trading and a user-friendly interface.

The biggest blow came from “Robinhood Social”, which launched at the end of 2025.

HOOD has effectively cloned eToro’s “secret sauce” by allowing users to follow verified traders and view live portfolios.

Because Robinhood maintains a commission-free mode for stocks and options, many retail traders who like the social aspect of eToro but hated the higher spreads/fees migrated to HOOD.

Meanwhile, Interactive Brokers fixed its historically “clunky” reputation with the launch of the IBKR Desktop platform in 2025, streamlining the professional-grade tools of their “Trader Workstation” into a much slicker, user-friendly interface.

Since IBKR offers notably lower margin rates and access to over 160 global markets, for “serious” retail investors – the one eToro calls “Popular Investors” – Interactive Brokers became a cheaper place to park large amounts of capital.

How to play ETOR shares after Q4 earnings?

While eToro focused on IPO and smaller acquisitions, Robinhood and IBKR leaned “aggressively” into generative artificial intelligence (AI).

Robinhood’s “Cortex AI,” which builds custom indicators using natural language, made eToro's “Copy Trading” look slightly dated to tech-savvy Gen Z traders who prefer AI-driven signals over following human gurus.

Together, these aforementioned cracks in the years-long foundation make eToro shares somewhat less attractive as a long-term holding in 2026.