Freetrade, a London-based online trading platform, disclosed to CNBC on Tuesday that it has entered into an agreement to acquire the U.K. customer base of Stake, an Australian investing application. This strategic move aims to strengthen Freetrade’s domestic market presence amidst growing competition from new digital investment platforms, including the U.S.-based giant Robinhood.
Freetrade revealed in an exclusive statement to CNBC that it has initiated a transaction with Stake to transfer all of Stake’s U.K. clients and assets managed in the U.K. to Freetrade’s platform. However, both companies declined to share financial details of the deal, including the value of Stake’s U.K. customer base.
Stake, headquartered in Sydney, Australia, was established in 2017 by Matt Leibowitz, Dan Silver, and Jon Abitz with the goal of offering low-cost brokerage services to retail investors in Australia. In addition to operating in New Zealand, Stake expanded its operations to the U.K. in 2020. Nonetheless, following a recent business review, Stake has decided to concentrate primarily on its operations in Australia and New Zealand.
As per the agreement, Stake’s U.K. customers will receive instructions on transferring their money and assets to Freetrade in the upcoming weeks. They can continue using their Stake accounts until the migration to Freetrade is completed in November.
Although Freetrade primarily operates in the U.S., it has been striving to expand into the European Union. The platform provides a variety of investment products including stocks, exchange-traded funds, individual savings accounts, and government bonds. By April 2024, Freetrade had accumulated over 1.4 million users.
Earlier this year, co-founder and CEO Adam Dodds announced his departure after leading the company for six years. Viktor Nebehaj, who served as the chief marketing officer, has since taken over the role of CEO.
Freetrade, along with its competitors, experienced significant growth during the 2020 and 2021 retail stock investing surge, notably involving “meme stocks” like GameStop. However, higher interest rates in the subsequent years adversely affected investor sentiment, leading to Freetrade’s announcement in 2022 of a plan to lay off 15% of its workforce. Moreover, the company’s valuation plummeted by 65% to £225 million ($301 million) during an equity crowdfunding round the following year, attributed to a changed market environment.
More recently, Freetrade has reported positive financial performance, achieving its first-ever half-year profit in 2024, with adjusted earnings before interest, tax, depreciation, and amortization reaching £91,000 in the first six months to June. Revenue increased by 34% year-over-year, totaling £13.1 million.
CEO Nebehaj remarked on the acquisition, highlighting the company’s focus on scaling Freetrade into the leading commission-free investment platform in the U.K. market. He asserted that the deal underlines their commitment to leveraging opportunities for inorganic growth to achieve that objective. He also noted that Freetrade worked closely with Stake to ensure a smooth transition and favorable outcomes for their U.K. customers, who they are eager to welcome and support.
Currently, Freetrade manages assets worth over £2 billion for its U.K. clients. Globally, Stake oversees assets valued at more than $2.9 billion.
Robinhood, holding a significant presence in the U.S. with $144 billion in assets under management, launched in the U.K. in November 2023 to considerable excitement. Earlier this month, Robinhood introduced a securities lending program in the U.K., aiming to attract more British clients.
