Robinhood has taken a new step toward the diversification of its business by acquiring X1 in a deal of approximately $95 million. The firm is responsible for the provision of income-based credit cards with a series of rewards. At the same time, users were also offered free trials and single-use credit cards.
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 toward serving all of our customers' financial needs. More info:… pic.twitter.com/VCUjBxkpsM
— Robinhood (@RobinhoodApp) June 22, 2023
As per the statement shared by Robinhood, the deal is expected to mature by the end of September this year. The firm mentioned how taking such a step would enable it to establish close relationships with existing customers.
Robinhood already offers debit cards to its customers that work in a similar fashion to Bitcoin debit cards, and this deal of acquisition would open new doors to revenue acquisition for the firm with more clients and the chance to issue more cards. Just last year in July, X1 reported a monthly volume of almost $50 million and highlighted how it expected to reach annualized spending of $1 billion by the end of the year.
Based on the recent earnings report shared by Robinhood, the total number of monthly active users fell from 16 million to under 12 million. The firm also witnessed a 30% revenue decline year on year in its crypto trading business which resulted in an inflow of $38 million in comparison to $54 million in Q1 of 2022.
Robinhood Seeks to Diversify Its Business
The acquisition of X1 marks the fifth acquisition by Robinhood over the course of four years. Previously in 2019, the firm acquired the daily financial newsletter MarketSnacks, and this deal was followed by three additional deals in 2021. These deals included the acquisition of the cross-exchange crypto trading platform, Cove Markets, the hiring firm Binc, as well as the shareholder’s platform, Say.
However, prior to the breakout of the crypto winter, Robinhood also acquired the UK-based crypto asset firm, Ziglu. Furthermore, the topic surrounding the current market valuation of X1 is shrouded in mystery. X1 claimed that more than 500,000 people were on the waiting list for a credit card. Similarly, the firm raised almost $62 million with the help of venture capital firms over the previous two years. Some of these firms include Craft Ventures, Soma Capital, FPV, and many more.
