Retail investor-friendly brokerage Robinhood Markets Inc HOOD is pushing the boundaries of the fintech space with its strategic acquisition of San Francisco-based X1, a platform that offers a no-fee credit card.
What Happened: The move marks a step in Robinhood’s journey to broaden its product offerings and deepen its relationship with existing customers. The deal is valued at around $95 million in cash, Robinhood’s press release said, subject to customary closing adjustments and conditions. The acquisition is expected to close in the third quarter of this year.
“Together with X1, Robinhood will now be able to offer our customers access to credit,” Robinhood CEO Vlad Tenev said in the release.
X1, backed by fintech giants including PayPal Holdings Inc PYPL co-founder Max Levchin, is known for its customer-friendly approach. Its credit card has annual fees, late fees, or foreign transaction fees.
X1 co-founders Deepak Rao and Siddharth Batra are slated to join Robinhood, leading the new business line, the release said.
Why It Matters: Robinhood has made strides in recent years to offer products beyond its core trading services.
The platform now offers 24-hour cryptocurrency and stock trading on select equities and ETFs, a 4.65% interest rate on uninvested cash, and a debit card. The X1 acquisition appears to be the next step in a broader strategy to dominate the fintech landscape.
The deal comes amid a dip in Robinhood’s core revenue, according to Reuters. The company has been hit by decreased retail trading activity due to the impact of interest rate hikes on the markets.
The company’s expanded offerings also aim to improve its average revenue per customer and bolster cross-selling to its existing base. Robinhood has already seen an uptick in its revenue from deposits and seeks to boost it further with the interchange revenue from credit cards.
Image and article originally from www.benzinga.com. Read the original article here.