Robinhood is a company that had big ambitions to revolutionize markets. They managed to attract millions of amateur investors into stock trading for the first time. However, the problems are mounting for Robinhood as the U.S. economy is going through a crunch time. Therefore, the company stated in a post on Tuesday that they will reduce its headcount by approximately 23 percent. The affected employees would receive an email and a Slack message letting them know of the decision.
Layoffs will impact employees across the U.S.
Vlad Tenev, the chief executive of Robinhood stated in his blogpost that the layoffs will impact employees across the country. Specially, the employees in operations, marketing and program management roles will be affected. Moreover, he cited citing economic uncertainty, a steep selloff in cryptocurrencies, and a deteriorating market environment as the reason for this decision. “I want to acknowledge how unsettling these types of changes are.” Tenev said in a blogpost. This is the second phase of the layoffs at Robinhood. Previously, the company laid off around 9 percent of its employees.
Reduction in revenues and customer base
Moreover, the company is now planning to flatten its organizational structure. Therefore, the new manager will get broader responsibilities for its businesses. Robinhood’s total net revenue rose to $318 million from $299 million in the first quarter. This increase was due to increase in revenue from cryptocurrency activities and net interest. However, the revenues were still well below from $565 million during the second quarter of 2021. In addition, the company also reported a decline in monthly active users and assets under custody. The company has witnessed a downward trend in growth as the pandemic boom in retail trading has slowed down. During pandemic times, the interest rate was zero and tech companies were booming. In addition, Americans had extra cash thanks to stimulus packages from the federal government. However, the situation has subsidized now and has forced the company to initiate layoffs.
Layoffs in tech companies
The layoffs are part of a series of job cuts at tech companies including cryptocurrency firms. In June, cryptocurrency companies like Coinbase and Gemini announced to layoff employees. Moreover, Shopify, an online marketplace announced to cut 10 percent of its 10,000 employees.
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