Robinhood To Lay Off 23% Of Staff In Order To Recuperate From Q2 Losses

Robinhood CEO is poised to lay off 23% of staff in order to recuperate from disastrous Q2 losses for the company.

Although revenue from crypto increased somewhat this quarter, the online retail broker blamed the economy for a fall in user numbers and net revenue that plunged 44% year over year.

Online trading company Robinhood will lay off nearly a quarter of its workforce, blaming a general crypto market meltdown and the macroeconomic environment’s continuous worsening.

On the same day, the company released mediocre Q2 financial results and the New York State Department of Financial Services announced a $30 million fine for the company’s crypto branch due to alleged Anti-Money Laundering, cybersecurity, and consumer protection violations, co-founder and CEO Vlad Tenev broke the bad news in a blog post on Tuesday.

Tenev stated that the company’s operations, marketing, and program management would be most affected by the layoffs, which would affect about 23% of the workforce. The Financial Times reported that 780 employees would be affected.

"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

Earlier this year, Robinhood fired 9% of its employees, but Tenev argued that the reductions “did not go far enough.” He said that the move was influenced by the state of the economy and the collapse of the cryptocurrency market, saying that it has resulted in further reduced customer trading activities and reduced assets under custody.

Additionally, the business believed incorrectly that the increased engagement experienced at the start of the COVID-19 outbreak would persist. Tenev wrote:

“As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me.”

One day early than expected, the firm released its quarterly financial results. The results were disappointing, with $318 million in net revenue, down 44% from a year ago but up 6% from the previous quarter. The net loss decreased from $502 million in Q2 2021 to $295 million.

In June, there were 14.0 million monthly active users, down 1.9 million from the previous quarter, and $64.2 billion less in assets under custody.

However, revenue from cryptocurrencies increased by 7% on a quarterly basis to $58 million.

Sam Bankman-Fried, the founder and CEO of FTX, spent $650 million for a 7.6 percent interest in Robinhood in May, which resulted in a huge increase in the stock price. Tuesday’s after-hours trade saw a more than 4% decline in stock values, according to Financial Time.

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