Robinhood Takes Drastic Measure Amid Plummeting Stock Prices
The former unicorn experienced massive growth during the pandemic, but hasn't sustained it since.
U.S. consumer investing and trading service company Robinhood once enjoyed unicorn status, then went public at $38 per share in July 2021, reaching $85 per share at its peak. But that value has since tumbled below $10 per share, and on Tuesday, CEO Vlad Tenev announced that the company would lay off 9% of its full-time employees.
Per Reuters, Robinhood had 3,400 employees earlier this year, and while the report didn't distinguish between full-time and contract employees, according to TechCrunch's calculations, the new workforce cuts will impact roughly 300 people.
In a letter shared with Robinhood employees after a company-wide meeting, Tenev cited pandemic lockdowns, low interest rates and fiscal stimulus as factors in the company's rapid growth, noting that net funded accounts climbed from five million to 22 million in 2021, with revenue skyrocketing from approximately $278 million in 2019 to more than $1.8 billion in 2021.
As the company grew, so did its workforce, increasing almost six-fold from 700 to 3,800 in that two-year period. "This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal," Tenev wrote. "After carefully considering all these factors, we determined that making these reductions to Robinhood's staff is the right decision to improve efficiency, increase our velocity and ensure that we are responsive to the changing needs of our customers."
Despite the sharp decline overall, the company did see its value increase 25% in March after it announced the extension of its equity trading hours, with the potential for 24/7 equities investing moving forward.
Robinhood is expected to report its Q1 2022 financial performance on April 28.
Robinhood Markets Inc was down over 5% today as of 10:38 a.m.
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