Robinhood (NASDAQ:HOOD) shares are up more than 6% premarket after the company revealed it plans to launch a credit card for US consumers.
The "Robinhood Gold Card" is available to Robinhood Gold members. The company said the credit card has no annual fee, no foreign transaction fees, and offers 3% cash back on all categories.
Furthermore, Robinhood said users can get 5% cash back when booking through the company's all-new Robinhood travel portal.
Reacting to the news, analysts said, "This is not just about credit card, but HOOD's rather smart strategy to acquire sticky assets and maximizing ARPU/wallet."
"HOOD has grown Gold users by 25% YoY (~$85mn ARR," noted analysts. "HOOD's total assets have grown 66% YoY. Feb's assets stood at $118bn, up 18% MoM. In addition, HOOD offers a 1% boost to users who deposit assets from other platforms but subject to 5-year hold in Gold plan. HOOD's revenue yield at 2.1% p.a more than covers the costs of acquisition."
Analysts believe that offering a disruptive credit card "is an asset acquisition and wallet maximization strategy."