Robinhood, the popular cryptocurrency and stock trading app, has acquired credit card startup X1 for $95 million, signaling its intent to diversify its range of services. X1 offers various credit card options, including an income-based rewards card, a free trial card, and a one-time credit card. The deal is expected to be finalized by the end of September, and Robinhood views it as a significant step in deepening its relationships with existing customers.
By acquiring X1, Robinhood gains a new revenue stream and expands its offerings beyond debit cards. X1 reported impressive monthly sales of $50 million and projected annual spending of $1 billion by the end of this year in a press release dated July 18, 2022. Robinhood's latest financial report indicates a decline in monthly active users from 16 million in Q1 2022 to approximately 12 million in the same period this year. Additionally, the company experienced a 30% year-over-year decrease in cryptocurrency trading revenue, with $ 38 million in Q1 2023 compared to $54 million in Q1 2022.
This acquisition marks Robinhood's fifth in four years, following previous acquisitions of MarketSnacks, Cove Markets, Binc, and Say. While the current valuation of X1 remains undisclosed, the startup anticipates half a million individuals to be awaiting their credit cards in 2022. X1 has secured over $60 million in funding from venture capital firms such as Craft Ventures, Soma Capital, and FPV, with investments from notable figures like Wesley Chan, co-founder of Google Analytics and an investor in Robinhood and Plaid.
Robinhood's acquisition of X1 demonstrates its strategic focus on expanding its product offerings and diversifying revenue sources, aiming to solidify its position as a comprehensive financial services provider.
