Robinhood buys credit card provider X1 for $95 million

Key Points

  • Robinhood agreed to buy X1 for $95 million.
  • X1 is a trading platform that offers no-fee credit cards and rewards on purchases.
  • This decision could help Robinhood diversify its revenue streams after reporting a drop in users and trading revenue.

Shares of Robinhood Markets (HOOD) were down 5% in early trading Thursday after the online trading site announced it had agreed to buy X1, a San Francisco-based trading platform that offers free credit cards and rewards. on every purchase. 

Robinhood indicated that it would pay approximately $95 million in cash upon closing of the deal, which is expected in the third quarter.

Co-founder and CEO of Robinhood Vlad Tenev said the purchase “brings us closer to our goal of meeting the full range of critical financial needs of our customers.”

The company has indicated that the X1 co-founders Deepak Rao and Siddharth Batra would oversee X1's new business, with Rao becoming general manager of credit cards.

The move could help diversify Robinhood's revenue stream, after the company saw a drop in subscriber numbers and trading volume. Robinhood reported last week that in May, monthly active users (MAUs) fell 28% from a year earlier, and transaction revenue fell 9%, transaction volume shares fell by 15% and cryptocurrency volume by 68%.

Robinhood shares fell after the announcement, but were still up 14% YTD.

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Source: investopedia.com

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