Robinhood, the trading platform that gained notoriety for allowing amateur stock investors to play the market, is laying off nearly a quarter of its staff – citing economic conditions and the crash of the cryptocurrency market.
The news it was slashing 23% of its staff came as the company posted a 44% decline in revenues on slumping trading activity, in a surprise earnings report that came one day earlier than scheduled, and sent the company’s shares down more than 3% in extended trading.
The company will lay off about 23% of its employees as part of a “reorganization”, said CEO Vladimir Tenev in a blog post. “Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the Covid era would persist into 2022,” wrote Tenev.
“Since that time, we have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.”
Robinhood had already slashed 9% of its workforce in April, saying the company’s growth had led to some duplicate roles and job functions. Tenev said Tuesday that those cuts did not go far enough.
“As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me,” Tenev said.
Robinhood’s easy-to-use interface made it a hit among young investors trading from home on cryptocurrencies and stocks such as GameStop Corp during the Covid-19 pandemic.
However, the company has posted declines in revenue as its customer base has been spooked by rising interest rates and decades-high inflation.
It’s not the only tech company weathering a slump, with Meta, Netflix and others struggling to maintain their explosive pandemic-era growth. In its recent quarterly earnings report, Tesla revealed it was selling off 75% of its bitcoin holding, while Google has implemented a hiring freeze. The crypto exchange platforms Coinbase and BlockFi have also struggled in the crypto crash, laying off hundreds of staff.
On Tuesday, Robinhood posted net revenues for the second quarter of $318m as revenues from equity, options and crypto trading more than halved, compared with $565m a year earlier, according to a filing with the US Securities and Exchange Commission. Robinhood’s monthly active users also appeared to fall by roughly a third, at 14 million for June 2022 compared with 21.3 million in the second quarter of 2021.