It was an unstable one year for retail investment behemoth Robinhood. The fintech company is laying off 23% of its workforce, as first reported by the Wall Street Journal and confirmed by TechCrunch. The layoff comes just three months after Robinhood cut 9% of its full-time staff.
At the time of its latest layoffs in late April, Robinhood was believed to have about 3,100 employees after laying off about 300 workers. Doing the math, a 23% staff reduction would amount to approximately 713 affected employees, leaving approximately 2,400 employees currently employed by the company
The company did not immediately comment on the latest layoffs, citing only TechCrunch a blog post by the CEO and co-founder Vlad Tenev. In that post, Tenev wrote that while “employees from all functions will be affected, the layoffs are “particularly concentrated” in the company’s operations, marketing and program management.
In the post, Tenev took responsibility for Robinhood’s apparent over-hiring in the frenzy that was 2021. He said the company last year staffed many of its functions under the assumption that the “increased retail engagement” taking place would continue into 2022.
“In this new environment, we are operating with more staff than appropriate,” he wrote. “As CEO, I approved and took responsibility for our ambitious staffing trajectory — that’s for me.”
Tenef also said his previous round of layoffs “didn’t go far enough.”
“Since that time, we have seen further deterioration of the macroeconomic environment with inflation at 40-year highs accompanied by a widespread collapse of the crypto market. This has further reduced client trading activity and assets under custody,” he wrote. Robinhood is not alone in choosing to make two rounds of layoffs in a short period of time. just seven weeks after crypto exchange Gemini cut about 10% of its workforce, the company cut another 7% of its staff, according to sources.
Robinhood also released its second quarter today financially, revealing a 6% increase in net income of $318 million versus a net loss of $295 million, or 34 cents per share. That loss was smaller than its net loss of $392 million, or 45 cents per share, in the first quarter of 2022.
Transaction-based revenue was down 7% to $202 million, while cryptocurrency was up 7% sequentially to $58 million.
Robinhood also included operating expenses related to the layoff and restructuring, saying the costs would be $17 million in the April restructuring and an estimated $45 million to $60 million in the August restructuring. In 2022, total operating expenses are expected to decline between 7% and 10% compared to the previous year, Robinhood claims.
Robinhood’s share price has been volatile over the past year, too. At press time, the company is trading at $8.90 after hours, down dramatically — down 89% — from its 52-week high of $85. It also decreases by 3.6% after hours.
Earlier today, the WSJ wrote that Robinhood was slapped $30 million fine by a New York financial regulator, specifically in its cryptocurrency trading industry.