Crypto and stock trading app Robinhood continues to diversify its business portfolio with its recent $95 million acquisition of credit card startup X1. The fintech firm is known for offering income-based credit cards with rewards and free trial and single-use credit cards. This acquisition is expected to deepen Robinhood’s relationship with existing customers and introduce a new revenue stream as the company’s current monthly active user base dropped from 16 million in Q1 2022, to just below 12 million in 2022.
On the flip side, Robinhood saw a 30% year-on-year revenue decline for its crypto trading business, sliding from $54 million in Q1 2022 to $38 million in Q1 2022. The acquisition of X1 could be seen as a means to bolster the company’s dwindling fortunes in the crypto space while diversifying its offerings.
X1 claimed in 2022 to have 500,000 people on its waiting list for a credit card. Since its founding in 2020, the startup has managed to raise over $60 million from venture capital firms, including Craft Ventures, Soma Capital, and Google Analytics co-founder Wesley Chan’s firm, FPV.
Robinhood’s acquisition of X1 marks the company’s fifth within the last four years. Previous acquisitions include daily financial newsletter MarketSnacks in 2019, cross-exchange crypto trading platform Cove Markets, hiring firm Binc, and shareholder’s platform Say in 2021. Additionally, prior to the crypto winter, Robinhood also acquired UK-based crypto asset firm Ziglu in April 2022.
On the surface, this recent acquisition paints a rosy picture for Robinhood, giving hope to the company’s ability to provide diverse financial services while maintaining its presence within the crypto community. However, the overall declining user base and revenue puts pressure on Robinhood to ensure the success of its new ventures.
The diversification of offerings, which includes adding credit cards through its X1 acquisition, presents new opportunities for Robinhood. Still, it remains to be seen if these efforts are enough to halt the decline in user base figures and revenue from its crypto trading business.
In conclusion, Robinhood’s acquisition of fintech company X1 offers a potential lifeline as it struggles with dwindling user base figures and declining crypto trading revenue. Diversification into credit card services could provide additional revenues and solidify the company’s presence within the financial sector. However, the success of this venture and its impact on Robinhood’s overall prospects is yet to be determined.
Source: Cointelegraph
