Robinhood cuts nearly a quarter of staff as crypto dives

By Michael Race
Business reporter, BBC News

  • Published
Baiju Bhatt (left) and Vlad Tenev, founders of the online brokerage Robinhood, walk along Wall Street after going public with an IPO earlier in the day on July 29Image source, Getty Images
Image caption,
Founders Baiju Bhatt and Vlad Tenev set up the trading platform while at university

Trading platform Robinhood is cutting nearly a quarter of its staff due to high inflation and the falling cryptocurrency market.

The company said the economic climate had reduced trading activity, which had boomed at the height of the pandemic.

The move comes after the firm reported quarterly revenues of $318m (£260m), 44% down on $565m a year earlier.

In April, the firm slashed 9% of its workforce, which its boss Vlad Tenev said "did not go far enough".

"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," said Mr Tenev.

"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."

The latest cuts will affect 780 members of staff, and come in addition to the cuts announced earlier this year.

Mr Tenev said all staff would receive "an email and a Slack message with your status - with resources and support if you are leaving".

He added workers, called "Robinhoodies" in the California-based company, would be able to stay in position until 1 October, be offered a severance package and given help in searching for another job.

"We know that this news is tough for all Robinhoodies, and we are also offering wellness support to those who would like it," he said.

Robinhood's commission-free trading proved hugely popular with amateur traders during the Covid lockdowns, which saw the number of account holders double.

But its customer base has been spooked by the cost of living rising and higher interest rates, which have hit global markets and sent cryptocurrencies slumping.

Image source, Getty Images

Its monthly active users also appeared to fall by roughly a third, at 14 million for June 2022 compared with 21.3 million in the second quarter of 2021, Reuters reported.

The online brokerage's mission is to "democratise finance for all", but it hit the headlines in January 2021 for restricting the buying of shares in the US games firm GameStop, which caused outrage among Americans buying the company's stock with the aim of pushing up the price.

Mr Tenev apologised to customers at a US congressional hearing in which lawmakers said the move had raised questions about fairness in financial markets.

The platform has also faced criticism for exposing amateurs to risky products such as meme stocks - shares which become popular via social media - and cryptocurrencies.

The company said in its drive for "greater cost discipline" it would restructure the organisation by having general managers taking up "broad responsibility" for its individual businesses.

Mr Tenev said the change would "flatten hierarchies" and "remove redundant roles and positions".

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