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Cryptocurrency and stock trading app Robinhood has taken a new step to diversify its business portfolio by acquiring credit card startup X1 for $95 million. The Fintech firm offers an income-based credit card with rewards, as well as free trial and disposable credit cards.
The deal is expected to close by the end of September, Robinhood said in a June 22 statement, adding that the move was a “major step” towards closer relationships with existing customers.
Robinhood, which already offers debit cards to its customers, is getting a new revenue stream from the acquisition. In a July 2022 press release, X1 reported a monthly volume of $50 million and expected annual spending to reach $1 billion by the end of the year.
Announcement incoming We’re acquiring @x1creditcard, a platform that offers a no fee, stainless steel credit card with rewards on every purchase, and an intuitive mobile app experience. This is an important step towards serving all of our customers’ financial needs. More info:… pic.twitter.com/VCUjBxkpsM
— Robinhood (@RobinhoodApp) June 22, 2023
According to Robinhood’s latest earnings report, the monthly active user base has dropped from 16 million in the first quarter of 2022 to just under 12 million in the same period this year. The company also faced a 30 percent year-on-year decline in revenue from its cryptocurrency trading business, with first-quarter cryptocurrency trading revenue of $38 million compared to $54 million in the first quarter of 2022.
According to Crunchbase, this is Robinhood’s fifth acquisition in four years. The company acquired daily financial newsletter MarketSnacks in 2019, followed by three deals in 2021, including cross-exchange cryptocurrency trading platform Cove Markets, recruitment firm Binc, and shareholder platform Say. Before the crypto winter hit, in April 2022, Robinhood acquired the United Kingdom-based crypto assets company Ziglu.
X1’s current valuation is unknown, but the company has said it has 500,000 people on the credit card waiting list in 2022. Since 2020, the startup has raised more than $60 million from venture capital firms including Craft Ventures, Soma Capital and FPV, the firm of Google Analytics co-founder Wesley Chan, who is also an investor in Robinhood and financial services company Plaid.