Robinhood, the trading platform that became famous for allowing amateur stock investors to play the market, is laying off nearly a quarter of its staff – citing financial conditions and the crash in the cryptocurrency market.
The news that it was cutting 23% of staff came as the company reported a 44% drop in revenue on falling trading activity, in a surprise earnings report that came one day earlier than planned, sending the company’s shares down more than 3% in extended trading.
The company will lay off about 23% of its employees as part of a “reorganization,” CEO Vladimir Tenev said in a blog post. “Last year we staffed many of our operations functions under the assumption that the increased retail engagement we had seen with the equity and crypto markets in the Covid era would persist into 2022,” Tenev wrote.
“Since then we have seen further deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.”
Robinhood had already cut 9% of its workforce in April, saying the company’s growth had led to some duplicate roles and job functions. Tenev said on Tuesday that these cuts did not go far enough.
“As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me,” said Tenev.
Robinhood’s user-friendly interface made it a hit with young investors trading cryptocurrencies and stocks like GameStop Corp from home during the Covid-19 pandemic.
However, the company has reported a decline in revenue as its customer base has been spooked by rising interest rates and decades of high inflation.
It’s not the only tech company to endure a downturn, with Meta, Netflix and others struggling to maintain their explosive growth in the pandemic era. In its latest quarterly report, Tesla revealed that it sold 75% of its bitcoin holdings, while Google has implemented a hiring freeze. Crypto exchange platforms Coinbase and BlockFi have also struggled in the crypto crash, laying off hundreds of employees.
On Tuesday, Robinhood posted second-quarter net income of $318 million as revenue from stock, options and crypto trading more than halved, compared to $565 million a year earlier, according to a filing with the US Securities and Exchange Commission. Robinhood’s monthly active users also appeared to fall by about a third, at 14 million for June 2022 compared to 21.3 million in the second quarter of 2021.