Online brokerage Robinhood announced plans to lay off 23% of its workforce this week, amid falling revenues.
It’s been a miserable week for the company, as its second quarter earnings report revealed a 44% drop in revenue from a year ago, and the state of New York hit the trading app with a $30 million fine.
Earlier this year, Robinhood CEO Vlad Tenev announced a 9% cut in the company’s workforce, but challenging economic conditions and the collapse of the cryptocurrency market have resulted in further job losses. The latest round of layoffs will affect 780 employees.
Decades-high inflation, the prospect of a recession and turmoil in cryptocurrency markets appear to have discouraged retail investors. Robinhood’s monthly active users for June dropped by more than 7 million. That 34% decrease has resulted in the company’s assets under custody falling by more than $37 billion from the second quarter a year ago.
Robinhood’s commission-free trading attracted a huge number of retail investors, particularly during Covid lockdowns, when the number of account holders doubled. But that saem customer base appears to be less enthusiastic in the current economic conditions.
“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 a blog post. “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.”
On Tuesday, the New York State Department of Financial Services fined Robinhood’s cryptocurrency arm $30 million for allegedly not adhering to reporting requirements in place for anti-money laundering and cybersecurity regulations.