eToro (ETOR) Risk Analysis

As a foreign private issuer, we are subject to different disclosure and other requirements than domestic U.S. registrants. For example, as a foreign private issuer, in the United States, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act, including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act; however, following recent amendments to Section 16(a) of the Exchange Act, our directors and certain of our officers will become subject to the reporting provisions set forth therein, effective March 18, 2026. In addition, we rely on exemptions from certain U.S. rules which permit us to follow BVI legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants. As a company organized under the laws of BVI, a substantial portion of our assets are located outside the United States. As a result, it may be difficult or impossible to (i) effect service of process within the United States upon us; or (ii) enforce, against us, court judgments obtained in U.S. courts, including judgments relating to U.S. federal securities laws. It is unlikely that BVI courts would entertain original actions against BVI companies, their directors or officers predicated solely upon U.S. federal securities laws. The BVI courts may apply any rule of BVI law which is mandatory irrespective of the governing law and may refuse to apply a rule of such governing law of the relevant documents, if it is manifestly incompatible with the public policy of BVI. Furthermore, judgments based upon any civil liability provisions of the U.S. federal securities laws are not directly enforceable in BVI. Rather, a lawsuit must be brought in the BVI on any such judgment. The courts of BVI would recognize a U.S. judgment as a valid judgment, and permit the same to provide the basis of a fresh action in BVI and should give a judgment based thereon without there being a re-trial or reconsideration of the merits of the case; provided that (i) the courts in the United States had proper jurisdiction in the matter and the parties had either submitted to the jurisdiction of the United States or were resident or carrying on business within the United States and were duly served with process in relation to such judgment, (ii) the judgment is for a debt or definite sum of money other than a sum payable in respect of taxes, fines or charges of a like nature or in respect of a fine, sanction, penalty, or similar fiscal or revenue obligations, (iii) the proceedings in the U.S. courts in which the judgment was obtained were not contrary to natural justice, (iv) the judgment was not obtained by fraud on the part of the party in whose favor the judgment was given or of the court pronouncing it, (v) the recognition or enforcement of such judgment would not be contrary to the public policy of BVI, (vi) the correct procedures under the laws of the BVI are duly complied with, (vii) the judgment is not inconsistent with a prior BVI judgment in respect of the same matter and (viii) enforcement proceedings are instituted within six years after the date of such judgment. BVI laws and regulations applicable to BVI companies do not contain any provisions comparable to the U.S. proxy rules, the U.S. rules relating to the filing of reports on Form 10-Q or 8-K or the United States rules relating to liability for insiders who profit from trades made in a short period of time, as referred to above. Furthermore, foreign private issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information, although we will be subject to BVI laws and regulations having, in some respects, a similar effect as Regulation Fair Disclosure. As a result of the above, even though we are required to file reports on Form 6-K disclosing the limited information which we have made or is required to make public pursuant to BVI law, or is required to distribute to shareholders generally, and that is material to us, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company. In addition, as a foreign private issuer, we have the option to follow certain home country corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following. We rely on this "foreign private issuer exemption" with respect to Nasdaq rules for shareholder meeting quorums, distribution of our annual report to shareholders, and the requirement to obtain shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity-based compensation plans, issuances that will result in a change of control of the Company, certain transactions other than a public offering involving issuances of a 20% or more interest in the Company and certain acquisitions of the stock or assets of another company). We may in the future elect to follow home country practices with regard to other matters. As a result of the above, our shareholders will not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

The trading market for our Class A common shares is affected by the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our Class A common shares could be negatively impacted. If we obtain securities or industry analyst coverage in the future, and if one or more of the analysts who covers us downgrades our Class A common shares or publishes inaccurate or unfavorable research about our business, our share price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Class A common shares could decrease, which could cause the share price and trading volume of our Class A common shares to decline.

As of December 31, 2025, we have an aggregate of 755,478,228 Class A common shares and 60,796,482 Class B common shares authorized but unissued (including shares reserved for Class A common shares and Class B common shares issuance under our incentive plans). We may issue all of these Class A common shares and Class B common shares without any action or approval by our shareholders, subject to certain exceptions. Any Class A common shares and Class B common shares issued in connection with our incentive plans or otherwise would dilute the percentage ownership held by our shareholders.

Our A&R memorandum and articles provide that, unless we consent in writing to the selection of an alternative forum, the U.S. federal district courts shall be the sole and exclusive forum for any claim asserting a cause of action arising under the Securities Act and the Exchange Act. We note that investors cannot waive compliance with U.S. federal securities laws and the rules and regulations thereunder. This choice of forum provision may limit a shareholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may increase the costs associated with such lawsuits, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our A&R memorandum and articles inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. Any person or entity purchasing or otherwise acquiring any interest in our share capital shall be deemed to have notice of and to have consented to the choice of forum provisions of our A&R memorandum and articles described above.

The sale of substantial number of our Class A common shares in the public market, or the perception that such sales could occur, could harm the prevailing market price of our Class A common shares. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. In addition, pursuant to the Fifth Amended and Restated Investors' Rights Agreement, certain of our pre-IPO shareholders and their respective affiliates and permitted third-party transferees will have the right, in certain circumstances, to require us to register their Class A common shares under the Securities Act for sale into the public markets. See "Item 7.B. Related Party Transactions-Investors' Rights Agreement." The market price of our Class A common shares may decline significantly when the restrictions on resale by our pre-IPO shareholders lapse. A decline in the price of our Class A common shares might impede our ability to raise capital through the issuance of additional common shares or other equity securities.

We cannot predict whether our dual class structure will result in a lower or more volatile market price of our Class A common shares, adverse publicity or other adverse consequences. Certain index providers have announced restrictions on including companies with multiple class share structures in certain of their indices. For example, S&P Dow Jones has stated that companies with multiple share classes will not be eligible for inclusion in the S&P Composite 1500 (composed of the S&P 500, S&P MidCap 400 and S&P SmallCap 600), and under the announced policies, our dual class capital structure would make us ineligible for inclusion in any of these indices. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds and could make our Class A common shares less attractive to other investors. As a result, the market price of our Class A common shares could be materially adversely affected.

Certain provisions in our A&R memorandum and articles may have the effect of deterring coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and by encouraging prospective acquirers to negotiate with our board rather than to attempt a hostile takeover. These provisions include, among others: ?our dual class structure, which provides our pre-IPO shareholders, including our CEO and Co-Founder, Yoni Assia, individually or together, with the ability to significantly influence the outcome of matters requiring shareholder approval, even if they own significantly less than a majority of our outstanding Class A common shares and Class B common shares;?the existence of a staggered board;?the right of our board to issue preferred shares and to determine the voting, dividend, and other rights of preferred shares without shareholder approval;?the ability of our directors, and not shareholders, to fill vacancies on our board in most circumstances and to determine the size of our board;?the requirement for two-thirds (66²/3%) affirmative approval by shareholders entitled to vote at a meeting of our shareholders in order to remove directors or adopt, amend or repeal certain provisions of our A&R memorandum and articles and, for so long as any Class B common shares are outstanding the holders of at least two-thirds (66²/3%) of the Class B common shares outstanding at the time of such vote, voting as a separate series, to adopt, amend or repeal certain provisions of our A&R memorandum and articles;?restrictions on the ability of shareholders to call meetings and bring proposals before meetings;?the prohibition on shareholders acting by written consent without prior board approval;?the absence of cumulative rights in the election of directors;?the prohibition on shareholders to approve an amendment to our A&R memorandum and articles unless prior board approval has been obtained; and ?certain limitations on shareholders owning more than 9.99% of our issued share capital or voting rights, without approval from applicable regulatory authorities. While these provisions are not intended to make us immune from takeovers, they will apply even if the offer may be considered beneficial by some shareholders and may delay or prevent an acquisition that our board determines is not in the best interests of us and our shareholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

Each share of our Class B common shares is entitled to 10 votes per share, while each share of our Class A common shares entitles its holder to one vote per share. Shareholders that held shares immediately prior to the closing of our initial public offering (the "pre-IPO shareholders"), including our CEO and Co-Founder, Yoni Assia, received Class B common shares and, therefore, together hold all of our issued and outstanding Class B common shares. Accordingly, such pre-IPO shareholders own Class A common shares and Class B common shares (including shares over which they have voting or administrative control) representing, in the aggregate, as of February 20, 2026, based on information available to the Company, approximately 68% of the voting power of our outstanding share capital, which voting power may increase over time as such shareholders exercise or vest in equity awards outstanding at the time of the completion of our initial public offering. As a result, these shareholders will be able to significantly influence all matters submitted to our shareholders for approval, as well as our management and affairs, particularly if they were to choose to act together. These shareholders may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. For example, these persons, if they choose to act together, would control or significantly influence the election of directors, the adoption of amendments to our A&R memorandum and articles and approval of any merger, consolidation or sale of substantially all of our assets. This concentration of ownership control may: ?delay or prevent a change in control;?entrench our management and our board; or ?impede a merger, consolidation, takeover, or other business combination involving us that other shareholders may desire. Any such actions could deprive our shareholders of an opportunity to receive a premium for their share capital as part of a sale of our company and might ultimately affect the market price of our Class A common shares. Transfers by the holders of Class B common shares will generally result in those shares automatically converting into Class A common shares, subject to certain exceptions. In addition, all outstanding shares of our Class B common shares will automatically convert into one Class A common share at 5:00 p.m. New York City time on the earlier of (i) the date specified by affirmative vote or written consent of the holders of at least two-thirds (66 2/3%) of the outstanding Class B common shares, voting or acting as a separate class, (ii) such time on which the total number of issued and outstanding Class B common shares on a fully diluted basis (assuming for such purpose the conversion and exercise of any and all outstanding rights or securities that are convertible or exercisable into Class B common shares) represent less than fifteen percent (15%) of the total number of issued and outstanding Class B common shares on a fully diluted basis (calculated in the same manner) as of the date of the closing of our initial public offering (after giving effect to the sale of Class A common shares in our initial public offering) or (iii) May 13, 2035 (the tenth anniversary of the closing of our initial public offering). In addition, certain regulatory authorities provide that acquisition by any party of more than 9.99% of our issued share capital or voting power requires a license by such regulatory authorities or such ownership is otherwise approved. Our A&R memorandum and articles include provisions designed to help implement these requirements, which may impact shareholders' ability to vote or receive distributions with respect to any shares in excess of the foregoing limitation. Finally, holders of options and restricted share units outstanding as of immediately prior to the completion of our initial public offering will receive, upon exercise or settlement of their outstanding options or restricted share units under the Plans, Class A common shares and an equal number of Class B common shares, and such future issuances of Class B common shares would be dilutive to holders of Class A common shares.

In 2025, our board of directors authorized our repurchase program under which an amount of $150 million was made available to purchase our Class A common shares. In February 2026, our board of directors authorized a $100 million expansion of the previously authorized share repurchase program. The repurchase program, as authorized by our board of directors, provides the Company with the authority to make repurchases of our Class A common shares. The specific timing and amount of repurchases under the repurchase program will depend upon several factors, including but not limited to market and business conditions, the trading price of our Class A common shares, regulatory requirements and capital availability. The program does not require the purchase of any minimum dollar amount or number of Class A common shares, and the program may be modified, suspended or discontinued at any time. As of December 31, 2025, the Company has repurchased 1,568,741of our Class A common shares in an aggregate amount of $62.17 million. Repurchases of our Class A common shares pursuant to our repurchase program could affect the market price of our Class A common shares or its volatility. Additionally, our repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions. There is no assurance that our repurchase program will enhance long-term shareholder value, and short-term share price fluctuations could reduce the repurchase program's effectiveness.

The stock markets, including Nasdaq, have from time to time experienced significant price and volume fluctuations and therefore the market price of our securities may be volatile and could decline significantly. In addition, the trading volume in our securities may fluctuate and cause significant price variations to occur. If the market price of our securities declines significantly, you may be unable to resell your shares at or above the market price of our securities as of the closing. There can be no assurance that the market price of our securities will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following: ?the realization of any of the risk factors described herein;?actual or anticipated differences in our estimates, or in the estimates of analysts, for our key performance metrics;?additions and departures of key personnel;?failure to comply with the requirements of the stock exchange on which we list our Class A common shares;?failure to comply with the Sarbanes-Oxley Act or other laws or regulations;?future issuances, sales or resales, or anticipated issuances, sales or resales, of our securities;?publication of research reports about us or our industry generally;?the performance and market valuations of other similar companies;?volatility in the price of bitcoin and other cryptoassets;?broad disruptions in the financial markets;?speculation in the press or investment community;?actual, potential or perceived control, accounting or reporting problems; and ?changes in accounting principles, policies and guidelines.

We are taxed as an Israeli corporation and Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including a holding period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if the shares have not been disposed.

It may be difficult to enforce a U.S. judgment against us, our officers and directors in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors. Most of our directors or officers are not residents of the United States and most of their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against us or our non-U.S. directors and executive officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors reasoning that Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.