Why Etoro Stock Is Plummeting This Week

Etoro beat sales and earnings expectations for the second quarter.

The company announced that it will be acquiring TradeZero in a $231 million deal.

The company's performance update for July left the market cold, and some investors aren't excited about the TradeZero acquisition.

Etoro (NASDAQ: ETOR) stock is falling this week despite a better-than-expected second-quarter report. The trading platform specialist's share price was down 17.9% in the week's trading heading into Friday's market open.

Etoro published its Q2 results on Aug. 11 and reported sales and earnings for the period that topped Wall Street's forecasts. On the other hand, investors are taking a cautious approach to the company's near-term outlook and to the announcement of a significant acquisition.

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Etoro recorded non-GAAP (adjusted) earnings of $0.68 per share on sales of $229 million in the second quarter. The average analyst estimate called for adjusted earnings per share of $0.61 on revenue of roughly $225.7 million. Revenue in the period was up 9% year over year, and adjusted income increased roughly 17% to $63 million.

With its Q2 report, Etoro announced that it will be buying U.S. trading platform TradeZero in a $231 million deal. Investors and analysts appear to be split on the value of the move, and multiple investment firms noted some uncertainty surrounding the deal as a factor in lowering their price targets on the stock.