Robinhood, the commission-free investing company, is acquiring the X1 credit card for $95 million. The acquisition brings the expectations of diversification for Robinhood products by granting new access to credit for patrons. Here’s what you need to know about Robinhood’s recent investment in the X1 Card.
Robinhood Purchases X1 Card For $95 Million
Robinhood Markets is an American company that facilitates commission-free trades of stocks, exchange-traded funds, and cryptocurrencies. Additional services provided include individual retirement accounts via a mobile app. Recently, the company announced its most recent venture into credit cards. Robinhood is set to acquire the X1 credit card company for $95 million.
X1 Card Features
X1 Inc. is behind the X1 Card, a no-fee income-based credit card with rewards on all purchases. It features a sleek look and material made up of 17g of stainless steel. The X1 Card earns 2X points on purchases, 3X points when the cardholder spends $1,000 or more monthly, and up to 10X points for credit card referrals. Every 10,000 points are worth up to $100 and can be redeemed for cash, stocks, or with X1 affiliate brands in the following categories: tech, fitness, retail, and travel.
Most importantly, the X1 Card features no annual fee, no late fees, and no foreign transaction fees. The no-fee card features are part of its allure to the new acquisition as Robinhood finds it aligns with its company’s mission to democratize finance for all. Part of Robinhood’s plan is to expand its product offerings. With the X1 onboard, Robinhood continues on the path to diversifying its portfolio by providing access to credit to its customers.
“This acquisition will bring us closer towards our goal of serving the entirety of our customers’ critical financial needs. Together with X1, Robinhood will now be able to offer our customers access to credit,” said Vlad Tenev, CEO and co-founder of Robinhood. Source.
“When founding X1, we set out to create a different kind of credit card with an unparalleled experience for customers, similar to Robinhood’s mission to make our financial markets more accessible to all. We share the same ethos and joining together with Robinhood we’ll be able to offer an enhanced credit card experience,” said Deepak Rao, CEO and co-founder of X1. Source.
Robinhoods New Acquisition Expectations
Robinhood’s transaction-based revenue declined for the fifth straight quarter in Q1 2023. Robinhood executives have highlighted further expansion opportunities via subscription revenue from its Gold account, retirement accounts, and debit card offerings.
X1 brings a positive outlook with the expectation to grow revenue streams while also providing access to the promising credit card market and the interchange fee revenue that comes with it. The X1 Card also has a track record since its origination in 2020 for growing its venture-backed funding, totaling $62 million from investors.
Robinhood’s X1 credit card acquisition comes with the X1 team. They are being onboarded, including X1’s co-founders Deepak Rao and Siddharth Batra, who will oversee this new business for the company. Rao will report to the Robinhood CEO and Co-Founder, Vlad Tenev. The final merger has expectations to be $95 million in cash, subject to customary closing adjustments and conditions. The anticipated purchase will most likely close in Q3 2023.
Featured image by Robinhood
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