September 29, 2022

Robinhood fires 9% of full-time employees amid 75% stock crash after IPO

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Online broker Robinhood cut staff by 9%. CEO Vlad Tenev explained the move as a need to improve efficiency after a $2 billion loss in the previous two quarters.

During 2020 and the first half of 2021, the startup experienced a period of hyper-growth, with the number of non-zero accounts jumping from 5 million to 22 million, and revenue from $278 million in 2019 to $1.8 billion in 2021. Such dynamics of key indicators required an increase in the number of employees from 700 to almost 3,800 people.

The optimization of the state will guarantee the further implementation of the mission to democratize finance, he promised. In 2022, Robinhood will introduce new products in the areas of brokerage, cryptocurrencies, and spending/savings and will continue its international expansion. The basis for this will be $ 6 billion on the balance sheet.

In July 2021, the online broker went public with an IPO. Robinhood shares are down 88.8% from their peak. Since the beginning of 2022, its capitalization has dipped by 46.5%.

The Robinhood app has become popular amid the pandemic and the surge in interest in Dogecoin. Trading with the popular meme token generated over 40% of the company’s revenue in the second quarter of 2021.

Subsequent reports recorded a decrease in income from crypto trading and user activity. Wall Street’s attitude towards Robinhood stock could also be affected by the risks of an SEC review of regulation or a ban on charging for order flow. This practice forms the lion’s share of the company’s revenue.

Earlier, the CEO of the company, Vlad Tenev, called cryptocurrencies the basis for the future development of Robinhood.

In April 2022, online broker Robinhood expanded cryptocurrency wallet beta access to 2 million customers and announced plans to integrate Lightning Network “in the coming months.”

Prior to this, the online broker announced the replacement of debit cards with new Cash Cards with the possibility of receiving cashback in digital assets.

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