Freetrade, a UK-based rival to stock trading platform Robinhood Markets (HOOD), has been acquired by IG Group for £160 million ($195 million), a 29% discount to its most recent valuation.
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It’s the latest in a wave of consolidation in the industry, after Hargreaves Lansdown was acquired last year for £5.4 billion by a consortium of investors led private equity giant CVC Group.
Freetrade is a commission-free, self-directed investment platform with more than 700,000 customers and assets under administration of £2.5 billion ($3.05 billion) at the end of 2024. In the first half of the year, clients added £233 million ($284 million) on the platform, with net flows up 87%.
In 2024, revenue increased 32% year-on-year to £27.5 million ($33.5 million), including a record performance in the Fiscal fourth quarter, though profits remain elusive. Founded in 2016, it rode the meme stock wave of 2021 and at one stage was valued at £650 million ($792 million), but has struggled to generate a return, with a reported loss of £13.9 million ($16.9 million) in 2023.
Breon Corcoran, CEO of IG, commented, “This is a rare opportunity to strengthen IG’s UK trading and investments offering and broaden our target addressable market. Freetrade is one of the most successful emerging players in the UK direct-to-customer investment market.”
In 2022, JPMorgan (JPM) was rumoured to be considering a purchase of Freetrade.
HOOD Taps Growing UK Market
The deal highlights the potential for related stocks in the sector such as HOOD, which rallied 200% in 2024 alone.
HOOD launched in the UK last year and may be poised to tap a growing market.
IG noted in its statement announcing the Freetrade deal that the UK direct investing market has grown at 10% compounded annually and is forecast to grow strongly. Structural drivers of growth include the rise in popularity of self-directed investing, as well as greater individual responsibility for retirement planning, increased pension freedoms, growing financial literacy, digitalisation of services and demand for better value propositions.
Shares of HOOD rose further this week when Bernstein analyst Gautam Chhugani named the stock brokerage his top pick for 2025 in the digital assets space due to a potentially friendlier regulatory environment under a Trump administration.
Is HOOD a Good Stock to Buy?
Wall Street analysts have a Strong Buy consensus rating on HOOD stock based on 12 Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 322% rally in its share price over the past year, the average HOOD price target of $48.67 per share implies 5% upside potential.
