Robinhood claims the acquisition will help the firm get closer to its customer base.
Robinhood, a stocks, exchange-traded funds and cryptocurrencies trading platform, has made a strategic acquisition of a credit card startup, X1.
The deal, valued at $95 million, sees Robinhood integrating a fintech firm that offers income-based and single-use credit cards.
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Robinhood made a statement on June 22nd indicating that the acquisition is projected to be finalized by September's end, marking it as "an important step" towards establishing a stronger relationship with its customers.
The acquisition of X1 allows the company to enter a new avenue of revenue generation. It is worth noting that last year, X1 reported a monthly volume of $50 million and predicted hitting an annualized spend of $1 billion by the end of the year.
Talking about the acquisition, X1 co-founder and CEO Deepak Rao noted:
When founding X1, we set out to create a different kind of credit card with an unparalleled experience for customers, similar to Robinhood’s mission to make our financial markets more accessible to all. We share the same ethos and joining together with Robinhood we’ll be able to offer an enhanced credit card experience.
Recent data reveals a dip in Robinhood's user engagement, with its monthly active user base dropping from 16 million in Q1 2022 to just under 12 million in the same period this year. Concurrently, the company experienced a 30% annual drop in revenue from its cryptocurrency trading operations, declining to $38 million in Q1 2023 from $54 million in Q1 2022.
According to data from Crunchbase, the acquisition of X1 marks the fifth such move by Robinhood in four years.
This acquisition signals Robinhood's ongoing commitment to diversification and customer engagement, strengthening its foothold in the rapidly evolving fintech landscape.
