Online brokerage Robinhood will lay off nearly a quarter of its employees, citing a continued deterioration in the macro environment and a broad crypto market crash.
The wrong the news came in an Aug. 2 blog post from co-founder and CEO Vlad Tenev, the same day he posted lackluster second-quarter financial results, while the New York Department of Financial Services announced a $30 million fine for the company’s crypto arm due to alleged anti-money laundering, cybersecurity and consumer protection violations.
Tenev wrote that the layoffs would impact all functions of the company, particularly operations, marketing and program management, with around 23% of staff laid off. The Financial Times valued the number of employees affected would be approximately 780.
“Departing Robinhoodies will be offered the opportunity to remain employed 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 Robinhood Alumni Talent Directory).”
— zerohedge (@zerohedge) August 2, 2022
Robin Hood 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 crypto market as factors in this decision.
“This further reduced client trading activity and assets under custody.”
Additionally, the company had incorrectly assumed that the increased engagement seen at the start of the COVID-19 pandemic would continue. tenev wrote:
“As CEO, I have endorsed and taken responsibility for our ambitious staffing trajectory – it’s on me.”
The company Published its quarterly financial results one day before program. The results were disheartening, with $318 million in net revenue, down 44% year over year, although up 6% from last quarter. Net loss was $295 million, compared to a net loss of $502 million in the second quarter of 2021.
Monthly active users fell 1.9 million from last quarter to 14.0 million in June, and assets in custody fell 31% to $64.2 billion during that period.
However, cryptocurrency revenue increased 7% quarter-on-quarter to $58 million.
Robinhood saw a significant rise in share price in May after FTX founder and CEO Sam Bankman-Fried paid $650 million for a 7.6% stake in the society. Share prices fell more than 4% on Tuesday in after-hours trading, according to FT.