People line up for T-shirts at a pop-up kiosk for online brokerage Robinhood in New York after the company went public on July 29, 2021. On Tuesday, the company announced it was removing nearly a quarter of its staff.
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People line up for T-shirts at a pop-up kiosk for online brokerage Robinhood in New York after the company went public on July 29, 2021. On Tuesday, the company announced it was removing nearly a quarter of its staff.
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Trouble is mounting for Robinhood, a company that had big ambitions to revolutionize the markets by attracting millions of amateur investors to stock trading for the first time.
Tuesday, the company has announced plans to cut nearly a quarter of its workforce, citing economic uncertainty, strong cryptocurrency selling and a deteriorating market environment.
This is the second round of layoffs for Robinhood, which cut its workforce by around 9% in April.
The cuts mark another reversal for a company that created an app to trade stocks that became hugely popular as COVID-19 spread and the economy ground to a halt, leaving millions stuck at home with lots of free time.
At the time, interest rates were close to zero, tech companies were expanding, and Americans had extra cash thanks to federal government stimulus checks.
But a deep market downturn has eroded Robinhood’s fortunes this year. The company has seen its shares plummet more than 70% since raising nearly $2 billion when it went public in a high-profile IPO in 2021.
On Tuesday, CEO Vlad Tenev acknowledged in a blog post that the first downsizing of a few months ago “did not go far enough”.
“As CEO, I have endorsed and taken responsibility for our ambitious staffing trajectory – it’s on me,” he wrote. “In this new environment, we are operating with more staff than necessary.”
Robinhood CEO Vlad Tenev took responsibility after the company announced it was cutting 23% of its workforce.
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Robinhood CEO Vlad Tenev took responsibility after the company announced it was cutting 23% of its workforce.
Spencer Platt/Getty Images
This has been a difficult year for equities, which were trading at record highs at the end of 2021. Persistently high inflation led the Federal Reserve to aggressively raise interest rates, which particularly hit tech stocks at high increase.
On top of that, the world is learning to live with the pandemic and people are no longer confined to their homes. As a result, Robinhood faced a sharp drop in active users and an erosion of revenue.
Robinhood has also caught the attention of the government.
Also on Tuesday, a New York financial regulator fined the company $30 million “for material breaches in the areas of bank secrecy law/anti-money laundering obligations and cybersecurity.”
Robinhood isn’t the only tech company laying off staff. Shopify, Netflix, Tesla and several crypto companies have also cut staff amid a deteriorating economic outlook.