Robinhood Cuts 23% of Staff, CEO Vlad Tenev Says ‘It’s My Fault’

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It was unstable year for retail investment behemoth Robin Hood. Fintech company lays off 23% of employees, as first reported by the Wall Street Journal and confirmed by TechCrunch. The layoff comes in just three months after Robinhood cut 9% of its staff.

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At the time of the latest layoffs in late April, Robinhood is believed to have had about 3,100 employees after laying off about 300 people. Calculated, a 23% headcount cut would result in 713 affected employees, leaving the company with around 2,400 employees at present.

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The company did not comment directly on the latest layoffs, pointing out to TechCrunch only blog post from the CEO and co-founder Vlad Tenev. In the post, Tenev wrote that while “this will affect employees across all functions, the layoffs are “particularly concentrated” in the company’s operations, marketing, and program management divisions.

In this post, Tenev took credit for the apparent over-hiring of Robinhood employees in a frenzy that was in 2021. He said the company staffed many of its operational functions last year on the assumption that the “increased retail involvement” that has taken place will continue into 2022.

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“In these new conditions, we are working with more staff than necessary,” he wrote. “As CEO, I have endorsed and taken responsibility for our ambitious talent trajectory – that is my responsibility.”

Tenev also noted that the previous series of layoffs “didn’t go far enough.”

“Since then, we have seen an additional deterioration in the macroeconomic situation, with inflation reaching a 40-year high, accompanied by a massive collapse of the cryptocurrency market. This further reduced client trading activity and assets held in custody,” he wrote. Robinhood is not alone in its decision to go through two rounds of layoffs in a short period of time; just seven weeks after the crypto exchange The twins have cut about 10% of its workforce, the company cut another 7% of its workforce, according to sources.

Robinhood also released its second quarter today finance, showing a 6% increase in net revenue to $318 million, with a net loss of $295 million, or 34 cents per diluted share. That loss was less than its net loss of $392 million, or 45 cents per share, in the first quarter of 2022.

Transaction revenue fell 7% to $202 million, while cryptocurrencies rose sequentially by 7% to $58 million.

Robinhood also included operating expenses related to the layoffs and restructuring, saying the costs would be $17 million for the April restructuring and approximately $45 million to $60 million for the August restructuring. In 2022, total operating expenses are expected to be down 7-10% year-over-year, Robinhood claims.

Robinhood’s share price was also volatile last year. As of press time, the company is trading at $8.90 after hours, well down – 89% – from its 52-week high of $85. It also fell 3.6% after business hours.

Earlier today, the WSJ wrote that Robinhood received a slap in the face. $30 million fine the financial regulator of New York, in particular, in its division for cryptocurrency trading.

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