Robinhood, the crypto and stock trading app, has acquired X1, a credit card startup, for $95 million. X1 offers an income-based credit card with rewards, as well as free trial and single-use credit cards. The acquisition is expected to be completed by September 2023 and is seen as a significant step towards a deeper relationship with Robinhood’s customers. This acquisition allows Robinhood to gain a new revenue stream and diversify its business portfolio. X1 had reported $50 million in monthly volume and was expecting to reach $1 billion in annualized spend at year’s end in July 2022.
This move comes as Robinhood’s monthly active users base decreased from 16 million to just under 12 million in the first quarter of 2023. Additionally, the company saw a 30% decline in year-on-year revenue for its crypto trading business, with a $38 million in crypto trading revenue in Q1, down from $54 million in Q1 2022. This acquisition is the fifth for Robinhood in four years, following the purchase of MarketSnacks, Cove Markets, Binc, Say, and Ziglu. The current valuation of X1 is unknown, but the startup had raised over $60 million from venture capital firms since 2020.
Overall Goal of the Acquisition
Overall, the acquisition represents Robinhood’s effort to establish itself as a financial services platform that can serve all of its customers’ financial needs.