This is an unstable A year for retail investing giant Robinhood. The fintech company cut 23% of its workforce, as first reported by The Wall Street Journal and confirmed by TechCrunch. The layoffs come three months after Robinhood cut 9% of its full-time workforce.
At the time of the last layoff in late April, Robinhood was believed to have about 3,100 employees after laying off about 300.Doing the math, a 23% layoff would result in about 713 employees affected, of which the company currently employs about 2,400 people
The company did not directly comment on the latest layoffs, only pointing to TechCrunch a blog post by CEO & Co-Founder Vlad TenevIn that article, Tenev wrote that while “employees in all functions will be affected, the layoffs are “particularly concentrated” in the company’s operations, marketing and project management functions.
In the post, Tenev took responsibility for Robinhood’s apparent overhiring in the 2021 frenzy. The company staffed many of its operational functions last year, assuming the “high level of retail engagement” that is taking place will continue in 2022, he said.
“We are overstaffed in this new environment,” he wrote. “As CEO, I approve and take responsibility for our ambitious staffing trajectory — it’s up to me.”
Tenev also said its previous round of layoffs “did not go far enough.”
“Since then, we have seen further deterioration in the macro environment, with inflation reaching a 40-year high, accompanied by a broad crypto market crash. This has further reduced client trading activity and custody assets,” he wrote. The Robinhoods aren’t alone in opting for two rounds of layoffs in a short period of time. Just seven weeks after the cryptocurrency exchange Gemini cut about 10% of its workforce, the company has cut another 7% of its workforce, according to sources.
Robinhood also released its second quarter today finance, showing a 6% increase in net income to $318 million and a net loss of $295 million or 34 cents per diluted share. The loss was smaller than its first-quarter 2022 net loss of $392 million, or 45 cents per share.
Transaction-based revenue fell 7% to $202 million, while cryptocurrencies rose 7% sequentially to $58 million.
Robinhood also includes operating expenses related to severance and restructuring, saying charges related to the April restructuring will reach $17 million and are estimated at $45 million to $60 million in the August restructuring. In 2022, total operating expenses are still expected to decline by 7% to 10% from the previous year, Robinhood said.
Shares of Robinhood have also been volatile over the past year. At press time, the company was trading at $8.90 after hours, 89% below its 52-week high of $85. It was also down 3.6% a few hours later.
Earlier today, The Wall Street Journal wrote that Robinhood was slapped in the face $30 million fine By New York financial regulators, especially its cryptocurrency trading arm.