eToro, an Israeli-based brokerage's plan to merge with Fintech Acquisition Corp V facing a problem as stocks market currently experiencing bearish trend.
eToro's plan to go public through a merger with a special purpose acquisition company (SPAC) is reportedly experiencing problems, so the Israeli broker is currently looking for alternative funding. Last March 2021, eToro agreed to a go-public merger with Fintech Acquisition Corp V in an agreement to inject several hundred million dollars into the company with a valuation of more than $10 billion.
However, while the deal was still not finalized, there was turbulence in the market. eToro's US rival Robinhood, which completed its IPO last summer at a $32 billion valuation, saw its share price drop from $85 to around $10, giving the company a valuation of just $8.7 billion.
Apart from Robinhood, stocks of other online brokers in the US and Europe have also been hit and valuations have fallen over the past few months due to the bearish stock market due to investors' fears of rising inflation.
Complicating matters, in fact, quite a number of shares of companies with SPAC's IPOs traded well below their issuance prices, leading those who put money into existing SPACs (such as Fintech Acquisition Corp V) to resist mergers in order to get their money back.
Previously, eToro had agreed to lower its valuation in the SPAC deal, from $10 billion to $8.8 billion, but finalizing the deal on those terms now seems unlikely. Neither eToro nor Fintech Acquisition Corp V has made an official decision on any adjustments to their agreement.