Robinhood Lays Off 23% of Staff a Day Before Earnings Report
Analysts had predicted a decline in earnings prior to the layoff announcement
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key takeaways
- Laid off employees will have the option to stay until Oct. 1, 2022 with full pay and benefits
- HOOD was trading about 4.5% lower in after-hours trading Tuesday
Robinhood has shed 23% of its staffers, the company said Tuesday — one day ahead of its second-quarter earnings call.
The cuts are mostly concentrated to the operations, marketing, and program management teams, Robinhood CEO Vlad Tenev wrote in a blog post. The move comes shortly after the company announced a 9% reduction in headcount in April 2022, citing a decrease in growth.
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The impact on the company’s crypto trading business isn’t clear. A spokesperson for the division did not immediately return a request for comment.
The initial round of cuts “did not go far enough,” Tenev wrote.
Macro conditions and increasing inflation have contributed to decreased trading activity — leading to lower fee revenue — Tenev said. Additionally, the crypto market’s recent crash has negatively impacted trading volumes and related assets.
“Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022,” Tenev said. “In this new environment, we are operating with more staffing than appropriate.”
Laid off employees will receive an email and Slack message, the blog said. Departing staff will have the option to remain employed through Oct. 1, 2022 with full pay and benefits.
Analysts had already estimated that Robinhood, which went public in 2021 after pioneering a zero-fee trading structure for equities, would miss Wall Street’s consensus growth metrics — before the layoffs were made public.
The company’s stock traded about 4.5% lower in Tuesday’s after-hours session.
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