Crypto and stock trading app Robinhood has taken a new step to diversify its business portfolio by acquiring the credit card startup X1 in a $95 million deal. The fintech firm offers an income-based credit card with rewards, along with free trial and single-use credit cards. 

The deal is expected to be closed by the end of September, Robinhood said in a statement on June 22, adding that the move was “an important step” to a deep relationship with its existing customers.

Robinhood, which already offers debit cards to its customers, gains a new revenue stream with the acquisition. In a press release dated July 18, 2022, X1 reported $50 million in monthly volume and was expecting to reach $1 billion in annualized spend at year’s end.

According to Robinhood’s latest earnings report, its monthly active users base fell from 16 million in the first quarter of 2022 to just under 12 million over the same period this year. The company also saw a 30% revenue decline year on year for its crypto trading business, with $38 million in crypto trading revenue in Q1 2023, down from $54 million in Q1 2022. 

The fintech is Robinhood’s fifth acquisition in four years, according to Crunchbase. In 2019, the company acquired the daily financial newsletter MarketSnacks, followed by three deals in 2021 — the cross-exchange crypto trading platform Cove Markets, the hiring firm Binc and the shareholders’ platform Say. Before the crypto winter broke out, Robinhood acquired the United Kingdom-based crypto asset firm Ziglu in April 2022.

X1’s current valuation is unknown, but the company claimed to have 500,000 people on its waiting list for a credit card in 2022. Since 2020, the startup has raised over $60 million from venture capital firms such as Craft Ventures, Soma Capital and FPV, the venture firm of Google Analytics co-founder Wesley Chan, who is also an investor in Robinhood and financial services company Plaid.

Magazine: Tornado Cash 2.0 — The race to build safe and legal coin mixers