Robinhood (HOOD) Acquires Crypto App Ziglu

Deal renews the discount broker's global expansion plans

Online discount brokerage Robinhood Markets, Inc. (HOOD) announced on Tuesday, April 19, that it has agreed to buy Ziglu Limited—a London-based fintech app that allows users to trade Bitcoin and other leading cryptocurrencies. Robinhood, known for its commission-free stock trading, said that the acquisition will renew its global expansion push.

Key Takeaways

  • Robinhood has agreed to acquire London-based fintech crypto app Ziglu to bolster its global expansion.
  • Ziglu is one of the few crypto companies that has successfully registered with the U.K.'s Financial Conduct Authority.
  •  Robinhood initially planned a U.K. launch in 2020 but shelved the idea due to uncertainty caused by the pandemic.
  • Robinhood's revenue from cryptocurrencies jumped 304% to $48 million in the fourth quarter.

"Together with the Ziglu team, we'll work to leverage the best of both companies, exploring new ways to innovate and break down barriers for customers across the U.K. and Europe," said Robinhood's CEO and co-founder Vlad Tenev.

Robinhood, which since 2018 has offered trading in major cryptocurrencies like Bitcoin and Ethereum, initially planned to launch in the United Kingdom in 2020 but shelved the idea due to uncertainty caused by the pandemic. Robinhood's Ziglu acquisition coincides with the discount broker's recent launch of its highly anticipated crypto wallet to 2 million users.

Deal Eases Robinhood's U.K. Crypto Expansion

Ziglu is just one of 33 crypto companies since last year that has successfully registered with the U.K.'s Financial Conduct Authority (FCA), easing Robinhood's expansion of crypto-related products in Britain.

The U.K. government established plans earlier this year to make Britain a global hub for cryptoasset technology and investment.

The fintech firm founded by former Barclay's technology head and Starling bank co-founder Mark Hipperson allows users to buy and sell well-known cryptocurrencies, earn interest on their holdings, and make payments using a debit card. "As part of Robinhood, we'll supercharge Robinhood's expansion across Europe and bring better access to crypto and its benefits to millions more customers," Hipperson said.

Following a $9.1 million funding round in October last year, Ziglu was valued at $110.8 million. The company did not disclose the specific terms of the deal but said that it was subject to regulatory approvals and other customary closing conditions. Robinhood noted that it eventually expects to integrate Ziglu into its platform and expand operations throughout Europe.

Pivot to Crypto Amid Slowing Stock Trading Revenue

The announcement comes a little over two months after Robinhood cautioned that record pandemic-driven stock trading activity had slowed. The brokerage firm, which went public last year, shot to prominence in 2021 as an army of retail traders used its app to speculate on popular meme stocks, such as GameStop Corp. (GME) and AMC Entertainment Holdings, Inc. (AMC), amid a social media-driven buying frenzy. 

A meme stock refers to the shares of a company that have gained a cult-like following online and through social media platforms. These online communities can go on to build hype around a stock through narratives and conversations elaborated in discussion threads on websites like Reddit and posts to followers on platforms like Twitter and Facebook.

In the December quarter, Robinhood reported an 8% decline of monthly active users on a sequential basis and forecast first-quarter revenue to drop 35% from the year-ago period. However, revenue from cryptocurrencies jumped 304% to $48 million in the fourth quarter, accounting for 18% of the brokerage's total transaction-based revenue. Robinhood shares climbed over 5% on Tuesday, April 19, after the announcement.

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  1. Robinhood. "Robinhood Signs Agreement to Acquire Ziglu."

  2. Robinhood. "All Eligable Waitlist Members Now Have a Crypto Wallet - Lightning Network is Coming to Robinhood."

  3. Financial Times. "Robinhood to Acquire UK Crypto Group Ziglu."

  4. "Governmnet Sets Out Plan to Make UK a Global Cryptoasset Technology Hub."

  5. Reuters. "Robinhood Posts $423 Mln Net Loss, Shares Sink After Hours."

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