Robinhood Axes 23 Percent Of Jobs, Dismisses Talk Of Sale

The Robinhood financial stock trading app has signalled another tranche of employees are to be handed their P45s.

Robinhood CEO Vlad Tenev confirmed the bad news in a update after a company-wide meeting to discuss a reorganisation of the business and a further reduction in headcount numbers.

It has been an eventful time for the trading app. Last November it had to contend with a ‘data security incident’ after it warned that a third party had obtained access to the email addresses of five million customers.

Job losses

Then in April this year, the Menlo Park, California-based firm announced it would lay of 9 percent of its workforce.

But worse was to come this week during its earnings release, when the firm reported a smaller-than-expected loss for the second quarter.

Monthly active users reportedly declined and revenue was down more than 40 percent year over year.

Simultaneously, the fintech firm confirmed it will reduce its headcount by a further 23 percent.

“As part of a broader company reorganisation into a General Manager (GM) structure, I just announced that we are reducing our headcount by approximately 23 percent,” blogged Vlad Tenev. “While employees from all functions will be impacted, the changes are particularly concentrated in our operations, marketing, and program management functions.”

Tenev acknowledged how unsettling this is, and admitted that April’s 9 percent layoffs “did not go far enough.”

“Since that time (April), we have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash,” wrote Tenev. “This has further reduced customer trading activity and assets under custody.”

“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,” Tenev noted. “In this new environment, we are operating with more staffing than appropriate. As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me.”

Robinhood is also flatten its organisational structure to give new general managers broad responsibility for its businesses.

Tenev also said that affected employees would receive an email and a Slack message letting them know if they were being make redundant or still had a job, immediately after an all-hands meeting held on Tuesday.

Tough conditions

It is clear that Robinhood is being confronted with the new economic reality.

Robinhood went public in July 2021 when its shares began trading at $38 per share. In the first month of trading its shares rose to $85 per share.

But thereafter its stock price quickly declined by a staggering 70 percent.

Shares in Robinhood are currently trading at just $10.31.

And CEO Vlad Tenev has dismissed talk of the $8bn company being a possible acquisition target.

During an investor call, CNBC quoted Tenev responding with “In one word: No,” when he was asked about potentially being bought by another firm.

“I think we’re in a great position as a stand-alone company,” he reportedly said. “I love us as a stand-alone company.”

Tenev did however admit that Robinhood was on the lookout for potential acquisitions of its own.

The company reported $6 billion in cash on its balance sheet at the end of the quarter, which will small comfort to those staff being let go.