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Robinhood, a popular trading app featuring stocks, cryptocurrencies, and a variety of other trading products, announced yesterday, April 19th, that it decided to buy a London fintech app Ziglu. Ziglu is a crypto-oriented app that lets users trade Bitcoin and a number of popular altcoins.
With this acquisition, Robinhood will be able to revisit its plans to expand into the UK, and to the rest of the European countries.
Robinhood’s struggles may end with the new move
The company’s new announcement came almost two years after the plans to expand into the UK were shelved. Back then, Robinhood said that it has gotten a fresh perspective and that it decided that it needs to dedicate more attention to business at home, while international expansions will have to wait. Well, two years later, it appears that the time has finally come, and the opportunity to do so emerged with Ziglu.
Following the announcement, Robinhood has seen a 5% surge in the price of its shares, showing the investors’ support and great expectations for the platform which might soon be available throughout Europe. The deal could also take the platform’s shares further up, and become a crucial boost for Robinhood’s growth prospect.
The company has seen a significant performance hit after its involvement in the GameStop shorting in early 2021. Back then, a group of institutional investors shorted GameStop stocks with the intention of making a profit, not caring about the fact that the move will destroy the company. A group of amateur investors from Reddit, called WallStreetBets, started massively buying GameStop stocks in order to help the company, and Robinhood decided to make the GameStop shares unavailable to them in order to prevent the redditors’ intervention.
This earned it quite a bit of criticism, and the company saw a major drop in monthly active users throughout the year. In Q3 2021, the platform had 18.9 million users, which dropped to 17.3 million in the final quarter of the year. Furthermore, its own estimate for Q1 2022 was under $340 million, which represents 35% drip from the same period last year.
In other words, the company’s purchase of Ziglu could end up bringing a much-needed recovery period. The firm’s CEO, Vlad Tenev, said that the Ziglu acquisition will also help with the acceleration of Robinhood’s global expansion efforts. Robinhood intends to start working with the Ziglu team to leverage the best of both firms and explore new ways to innovate, as well as break down barriers for European customers.
The benefit of acquiring Ziglu
For now, the details of the acquisition remain unknown. However, what is known is that the deal is subject to certain regulatory approvals and “other customary closing conditions,” as Robinhood stated.
Meanwhile, Ziglu’s own CEO, Mark Hipperson, said that his company has a set of goals that are very similar to what Robinhood wishes to achieve. This makes the two firms compatible in terms of what they wish to pursue. As part of Robinhood, Ziglu will help the company’s expansion plans in Europe. Along the way, it will also bring a better way for crypto users to access cryptocurrencies, which is something that millions of people on the continent could benefit from.
Ziglu will allow users to easily make payments, invest in a range of coins, and even earn interest from holding BTC and GBP, which represents new opportunities for many in Europe, regardless of whether they are EU countries or not.