online brokerage company Robinhood will lay off nearly a quarter of its employees, citing the continued deterioration of the macroeconomic environment and the general decline of the cryptocurrency market.
The bad news came on August 2 in a blog from co-founder and CEO Vlad Tenev, the same day he released tepid second-quarter financial results, while the New York Department of Financial Services announced a fine of USD 30 million for the company’s cryptocurrency arm due to alleged anti-money laundering, cybersecurity, and consumer protection violations.
Tenev wrote that the layoffs would affect all functions of the company, particularly operations, marketing and program management, with around 23% of the workforce laid off. The Financial Times estimated the number of affected employees to be around 780.
“Departing Robinhoodies will be offered the opportunity to remain employed with Robinhood through October 1, 2022 and receive their regular pay and benefits. They will also be offered job search assistance (including an opt in Robinhood Alumni Talent Directory).”
— zerohedge (@zerohedge) August 2, 2022
“Exiting ‘Robinhoodies’ will be offered the opportunity to continue working at Robinhood until October 1, 2022 and receive their regular salary and benefits. They will also be offered job search assistance (including an option in the Job Directory). Robinhood Employee Talents).”
Robinhood laid off 9% of its staff earlier this year, but Tenev said the cuts “didn’t go far enough.” He pointed to economic conditions and the collapse of the cryptocurrency market as factors in the move.
“This has further reduced client trading activity and assets under custody.”
Furthermore, the company had wrongly assumed that the increase in participation seen during the beginning of the COVID-19 pandemic would continue. Tenev wrote:
“As CEO, I approved and took responsibility for our ambitious people journey – this is my fault.”
The company released its quarterly financial results a day ahead of schedule. The results were disappointing, with USD 318 million in net income, 44% less than the previous year, although 6% more than the last quarter. The net loss was $295 million, down from a net loss of $502 million in the second quarter of 2021.
Monthly active users were down 1.9 million from last quarter to 14 million in June, and assets under custody fell 31% to $64.2 billion in the same period.
However, revenue from cryptocurrencies increased 7% from the previous quarter, to $58 million.
Robinhood saw a major stock price rally in May, after FTX founder and CEO Sam Bankman-Fried paid $650 million for a 7.6% stake in the company. The share price fell more than 4% on Tuesday in after-hours trading, according to the FT.
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