Robinhood cuts nearly a quarter of its staff : NPR

People wait in line for T-shirts at a pop-up kiosk for online brokerage Robinhood in New York City after the company went public on July 29, 2021. On Tuesday, the company said it was cutting nearly a quarter of its staff.

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People wait in line for T-shirts at a pop-up kiosk for online brokerage Robinhood in New York City after the company went public on July 29, 2021. On Tuesday, the company said it was cutting nearly a quarter of its staff.

Spencer Platt/Getty Images

The troubles are mounting for Robinhood, a company that had big ambitions to revolutionize the markets by attracting millions of amateur investors to stock trading for the first time.

On Tuesday, the company announced plans to cut nearly a quarter of its workforce, citing economic uncertainty, a strong sell-off in cryptocurrencies and a deteriorating market environment.

This is the second round of layoffs for Robinhood, which cut its workforce by about 9% in April.

The cuts mark another turning point for a company that created a stock trading app that became wildly popular as COVID-19 spread and the economy stalled, leaving millions stuck at home with plenty of time on their hands.

Back then, interest rates were near zero, tech companies were expanding, and Americans had extra cash thanks to federal government stimulus.

But a deep downturn in the markets has eroded Robinhood’s fortunes this year. The company has seen its shares fall by more than 70% since raising nearly $2 billion when it went public in a high-profile IPO in 2021.

On Tuesday, CEO Vlad Tenev acknowledged in a blog post that the first staff reduction a few months ago “didn’t go far enough”.

“As CEO, I have approved our ambitious workforce trajectory and taken responsibility – this is up to me,” he wrote. “In this new environment we are working with more staff than necessary.”

Robinhood CEO Vlad Tenev took responsibility after the company announced it would cut 23% of its workforce.

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Robinhood CEO Vlad Tenev took responsibility after the company announced it would cut 23% of its workforce.

Spencer Platt/Getty Images

This was a difficult year for equities, which traded at record highs in late 2021. Continued high inflation prompted the Federal Reserve to aggressively raise interest rates, which has hit high-growth technology stocks particularly hard.

Moreover, the world is learning to live with the pandemic and people are no longer at home. As a result, Robinhood has experienced a steep decline in active users and declining revenue.

Robinhood has also caught the attention of the government.

Also on Tuesday, a New York financial regulator fined the company $30 million “for significant bank secrecy/anti-money laundering and cybersecurity deficiencies.”

Robinhood isn’t the only tech company to lay off staff. Shopify, Netflix, Tesla and several crypto firms have also cut their workforces amid the deteriorating economic outlook.

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