August 4, 2022
Robinhood Markets, the commission-free stock trading and investing app operator, is about to lay off nearly a quarter of its workforce, amid depressed cryptocurrency prices and a volatile stock market keeping a huge number of customers off its app, USA Today reports.
The unpredictable future of crypto-investing and the Fed’s dramatic rate hikes have wreaked havoc on a range of financial sectors, especially those popular with Robinhood users. The company, whose user-friendly software helped bring a new generation of stock investors to the market, will reduce its employee numbers by roughly 23%, according to CEO Vlad Tenev, who said taking such drastic measures was “inevitable.”
The recent financial turbulence has led to a decline in monthly average user numbers reported by Robinhood. The firm says it had 14 million monthly active users at the end of June, down from 15.9 million three months earlier, and 21.3 million in the year-ago period.
The pink slips for about 780 employees follow a round of layoffs announced earlier this year, when the company laid off 9% of its workforce, a move that “did not go far enough” in cutting costs, Tenev said in a post on the firm’s blog.
For a variety of reasons, Robinhood’s expansion has slowed dramatically over the last year. One major reason is that it was hard-pressed to repeat its blockbuster success from the first half of 2021.
Manias surrounding GameStop, other meme stocks, as well as the increased number of people investing in Dogecoin all aided in Robinhood’s revenue growth at the time. But since some micro regular investors backed up from trading, the company has begun facing financial difficulties.
Overall, Robinhood recorded a net loss of $295 million, or 34 cents per share, for the three months through June. That loss narrowed compared to the second quarter last year, when it stood at $502 million, or $2.16 per share.