NEW YORK (AP) — Robinhood Markets announced Tuesday that it will cut nearly a quarter of its workforce after a crash in cryptocurrency prices and stock market turmoil has pushed customers away from trading apps.
CEO Vlad Tenev said the company, which has helped attract a new generation of investors to the market with its easy-to-use app, will cut headcount by about 23%. The roughly 780 job cuts follow another layoff announced earlier this year that cut his 9% of the workforce, and cost cuts “weren’t enough,” he said Tenev said. said in a blog post.
The highest inflation in 40 years and the Federal Reserve’s sharp interest rate hikes to combat it have sent prices plummeting in all kinds of financial markets, especially those popular with Robinhood clients. Bitcoin fell from a record near $69,000 to around $23,000, causing a price crash across the crypto ecosystem. Meanwhile, Wall Street stocks fell more than 20% from record, and the S&P 500 entered a so-called bear market.
All of this ruckus means that Robinhood’s average monthly user count has dropped. This has hit the company hard as it performs best when its customers have many transactions. The Menlo Park, Calif.-based company said it had 14 million monthly active users in June, down from 15.9 million three months ago and 21.3 million in the second quarter of last year.
Overall, Robinhood reported a net loss of $295 million, or 34 cents per share, for the three months to June. That’s less than his reported loss of $502 million ($2.16 per share) in the second quarter of last year.
Revenue fell 44% from the year-ago quarter to $318 million, but beat analyst expectations.
Robinhood’s growth has slowed sharply over the past year for several reasons. The big problem is that they struggled to replicate their blockbuster performance from the first half of 2021. At the time, GameStop, other meme stocks, and the mania around Dogecoin all helped Robinhood’s earnings skyrocket.
But Robinhood is also battling a world with fewer restrictions due to the pandemic. This means potential customers no longer need to spend as much time at home. Also, some regular investors with less money have pulled out of the deal. They are called “individual investors” to distinguish them from professional large investors called “institutional investors”.
In his blog post, Teneff wrote, “Assuming that the heightened retail engagement seen in the stock and crypto markets last year during the COVID-19 era will continue into 2022, we will be staffing many operational functions. placed,” he said. “In this new environment, we are more than adequately staffed and operating. As CEO, I have approved and held an ambitious staffing trajectory. .”
Robinhood’s stock has mostly fallen since its debut last year. Almost halving so far in 2022, he rose 2.1% to close at $9.23 on Tuesday. It fell nearly 1% in after-hours trading.
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Robinhood has cut 23% of its workforce as it has fewer users to trade with. WGN Radio 720
Source link Robinhood has cut 23% of its workforce as it has fewer users to trade with. WGN Radio 720