On top of that, the world is learning to live with the pandemic and people are no longer confined xcritical official site to their homes. As a result, Robinhood has faced a steep drop in active users and eroding earnings. This has been a tough year for stocks, which were trading at record highs at the end of 2021. Persistently high inflation led the Federal Reserve to raise interest rates aggressively, and that has hit high-growth tech stocks particularly hard. The company has seen its shares tank more than 70% since raising almost $2 billion when it went public in a high-profile initial public offering in 2021.
“The company is hemorrhaging money, and it’s bad,” one ex-employee said, sharing an opinion on the company’s publicly reported quarterly financial figures. “I believe in the mission itself, but people cannot trust us ever since GameStop.” Tenev said employees across the company will be impacted by the layoffs, but that the cuts will be focused in Robinhood’s operations, marketing and program management groups. The cuts will primarily impact employees in Robinhood’s operations, marketing, and program management departments, CEO Vlad Tenev said in a message to employees that was also posted on the company’s blog. The stock trading and investing platform reported $441 million in earnings in Q1 of 2023. The fintech company is slashing 23% of its workforce, as first reported by the Wall Street Journal and confirmed by TechCrunch.
“After the announcement, we all just sat there refreshing our screens over and over to see if we were the ones to get the notification. The whole company froze for that 15 minutes waiting to see what happened to them.” When the Zoom call was over, employees waited anxiously to see if they would be let go; Tenev had said staff would be notified via email and Slack immediately after the call. Robinhood’s stock has shed about 50% of its value so far this year; it fell 2.3% after markets closed Tuesday to $9.92. Robinhood’s growth skyrocketed during the pandemic, when many people had the time to devote to trading, plus the cash, thanks in part to government stimulus checks and fewer entertainment options.
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It’s an understandable move, they added, given the brokerage’s access to sensitive client information. Monthly active users have been steadily declining the past three quarters, from 18.9 million in the third quarter of 2021 to 17.3 million in the fourth quarter to 15.9 million by March 2022. Revenue dropped 43% in the first quarter compared to the year prior as “customers became more cautious with their portfolios,” Tenev said at the time. The company previously announced plans in April to lay off 9% of its workforce after growing too rapidly during the pandemic amid a boom in stock-trading interest. In the first quarter of 2023, monthly active users have dipped to 11.8 million.
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- And questions about the company’s future, from both insiders and the industry players, burn hotter than ever.
- Robinhood did not comment directly on the latest layoffs, pointing TechCrunch only to a blog post by CEO and co-founder Vlad Tenev.
- On top of that, the world is learning to live with the pandemic and people are no longer confined to their homes.
- The company earned $299 million during the same period in 2022, according to its earnings report.
- They described a company, one year on since its public debut, facing a slowing market and looking for any and all ways to cut costs — and a workforce on tenterhooks with no clear line of sight into when the downsizing might end.
The problems are mounting for Robinhood, a company that had big ambitions to revolutionize markets by attracting millions of amateur investors into stock trading for the first time. Tesla laid off nearly 200 Autopilot employees while Shopify laid off 10 percent of its workforce. On Wednesday, Chennapragada, the company’s chief product officer, announced on LinkedIn and Twitter that she would step down but stay on as an advisor to Tenev. The cuts mark the second round of layoffs this year for Robinhood, which previously shed 9% of its workers, as its business xcritical scam copes with a decline in equities and a “crypto winter” that decimated the value of many cryptocurrencies. “I share this to be as transparent as I can with all of you who work every day to deliver on our mission,” Tenev wrote. “We will be parting ways with many incredibly talented people today in an extremely challenging macro environment, and I want to reduce the burden of this difficult transition as much as possible.”
“Together with X1, Robinhood will now be able to offer our customers access to credit,” co-founder and CEO Vlad Tenev said in a statement on Robinhood’s blog. Also on Tuesday, a New York financial regulator fined the company $30 million “for significant failures in the areas of bank secrecy act/anti-money laundering obligations and cybersecurity.” Robinhood CEO Vlad Tenev took responsibility after the company announced it was cutting 23% of its workforce. “Our GM structure has increased accountability and efficiency and we’re continuing to lean into that design,” a Robinhood spokesperson said. “We have a strong leadership team and are confident in our roadmap. We thank Surabhi for all of her contributions to the engineering organization and wish her the best on this next chapter.”
The announcements came as Robinhood released its Q earnings information a day earlier than scheduled, reporting total revenue of $318 million over the three months, which is 44 percent lower than the same period in 2021. Robinhood is letting go of nearly a quarter of its staff, CEO Vlad Tenev said in a message posted to the company’s blog. Robinhood’s stock peaked above $80 a share days after it went public last summer.
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“That was a ‘come down to earth’ moment for us. For a lot of people, we were living in fantasy land,” one newly axed employee said. The 150 workers slated to be given pink slips is the third round of layoffs at the company since April 2022. The company earned $299 million during the same period in 2022, according to its earnings report.
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The cuts mark another reversal for a company that created an app for trading stocks that became wildly popular when COVID-19 spread and the economy shut down, leaving millions stuck at home with plenty of time on their xcritical website hands. In April, weeks before the 9% workforce reduction, Robinhood announced the acquisition of the crypto-asset firm Ziglu. Robinhood has roughly $6 billion in cash on its balance sheet, and the company has a $2.5 billion budget for acquisitions, Warnick said on the earnings call.
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Jason Warnick, the company’s chief financial officer who has taken on the role of chief people officer, disclosed the company has made cuts through “reorgs,” including in teams like recruiting, engineering, and data science. Robinhood said its transaction-based revenue — money it earns when customers trade stocks, options or cryptocurrencies — plunged from a year earlier, when many retail investors piled into on “meme stocks” and asset values were high. Revenue from transactions at the company more than halved to $202 million in the quarter ended June 30, compared with $451 million a year earlier. “As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me,” he wrote. “In this new environment, we are operating with more staffing than appropriate.” “As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me,” Tenev, also a cofounder of the company, wrote, referring to staffers as “Robinhoodies” and “Hoodies.”
The layoffs have left Robinhood with a security team less than half of the size it was in November 2021, when a data breach exposed 7 million customers’ data, a person familiar with the team size said. A Robinhood spokesperson disputed this statement but did not provide information about the size of the team. Robinhood’s head of engineering is leaving the company, Insider has learned, the latest tech leader to depart amid deeper-than-reported cuts to its workforce, according to internal memos and audio of an all-hands meeting. With the company’s return-to-office plans being continually pushed back and only a handful of people coming into the office, “having an entire floor in what was an expensive building, they were probably bleeding money,” the former Arizona employee said. The employee estimated that about 200 Robinhood staffers were in the Tempe office. Another harbinger came in the weeks leading up to the layoffs when former employees saw representatives of other companies touring the Charlotte office, which Robinhood opened in 2021, to decide whether to take over the space, they said.
After the most recent layoff announcement, Robinhood’s stock jumped 15% Wednesday morning and then rose sharply again Thursday morning. Morale at Robinhood has been on the decline since the company laid off 9% of its employees in April, the staffers said. Stock-trading app Robinhood will lay off 23% of its staff, the company announced Tuesday.
It’s unclear when workers will start getting handed pink slips, which comes as the company adjusts to a slowdown in customer trading activity. The firings were made to “adjust to volumes and to better align team structures,” Chief Financial Officer Jason Warnick said in the message, the outlet reported. Transaction-based revenue was down 7% to $202 million while cryptocurrencies increased 7% sequentially to $58 million. Robinhood also today released its second quarter financials, revealing a 6% increase in net revenue of $318 million on a net loss of $295 million or 34 cents per diluted share. That loss was narrower than its net loss of $392 million, or 45 cents per share, in the first quarter of 2022.