Robinhood will Cut Employees by 9%, Stock Hits New 52 Week Low

Robinhood (NASDAQ:HOOD) has announced it will cut employees by around 9%. The news arrives at a time when shares in Robinhood are trading at or near an all-time low. Shares in Robinhood are hovering around $9.50 – far below its 52-week high of $85/share.

In a blog post, CEO and co-founder Vlad Tenev announced the decision to cut costs by slashing overhead calling the decision necessary. To quote Tenev:

“As you know, throughout 2020 and H1 2021, we went through a period of hypergrowth accelerated by several factors including pandemic lockdowns, low interest rates, and fiscal stimulus. We grew net funded accounts from 5M to 22M and revenue from ~$278M in 2019 to over $1.8B in 2021. To meet customer and market demands, we grew our headcount almost 6X from 700 to nearly 3800 in that time period.

This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal. 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.”

Tenev said that while the decision is not easy it is needed to pursue their strategic goals.

He added that Robinhood is in a strong position financially with $6 billion in cash. Robinhood also has access to a senior secured revolving credit facility with a total commitment of $2.275 billion provided by JPMorgan.

Robinhood reported quarterly net revenue in Q4 2021 of $363 million. Meanwhile, the company reported a loss for the quarter of $423 million.

Recently, Robinhood announced the acquisition of UK Fintech Ziglu as it looks to expand operations beyond the borders of the USA.

Robinhood is expected to report Q1 2022 earnings after market close tomorrow (April 28).

 

 

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