NEW YORK (AP) — Robinhood Markets said Tuesday it is cutting nearly a quarter of its workforce as a crash in cryptocurrency prices and a turbulent stock market keep more customers away from its trading app.
CEO Vlad Tenev said the company, whose easy-to-use app helped attract a new generation of investors to the market, will cut headcount by about 23%. The cuts of about 780 jobs follow another round of layoffs announced earlier this year that saw 9% of the workforce cut and “not far enough” in cost cuts, Tenev said in a company blog post.
The highest inflation in 40 years, and the Federal Reserve’s sharp increase in interest rates to combat it, have driven prices down in all kinds of financial markets, especially those popular with Robinhood customers. Bitcoin fell to around $23,000 from its all-time high of nearly $69,000, with prices crashing across the entire crypto ecosystem. Wall Street stocks, meanwhile, are down more than 20% from their all-time high, sending the S&P 500 into a so-called bear market.
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All this turmoil means that Robinhood’s average monthly users have dropped, which is hurting the company because it works best when its clients trade a lot. The Menlo Park, California-based company said it had 14 million monthly active users in June, up from 15.9 million three months earlier and 21.3 million in the second quarter last year.
Overall, Robinhood posted a net loss of $295 million, or 34 cents per share, in the three months to June. That’s a narrower loss than the $502 million, or $2.16 per share, reported in the second quarter of last year.
Revenue fell 44% year-over-year to $318 million, but was stronger than analysts expected.
Robinhood’s growth has slowed dramatically over the past year for several reasons. The big one is that he had a hard time reproducing his blockbuster in the first half of 2021. At the time, the craze around GameStop, other meme stocks, and dogecoins helped boost Robinhood’s revenue.
But Robinhood is also grappling with a world in which pandemic-related restrictions have been eased, meaning potential customers no longer have to spend as much time at home. And some ordinary investors with smaller pockets have given up trading. They are called “retail investors” to distinguish them from large professional investors called “institutional investors”.
“Last year, we staffed many of our operating units on the assumption that the increased retail engagement we have seen in the equity and crypto markets during the COVID era will continue into 2022,” Tenev said in a blog post. conditions, we work with more staff than necessary. As CEO, I’ve endorsed and taken responsibility for our ambitious talent trajectory – that’s on me.”
Robinhood’s stock has basically been falling since its debut last year. It nearly halved in 2022 to close on Tuesday at $9.23, up 2.1% on the day. It fell nearly 1% after hours.
Credit: www.usatoday.com /