Robinhood CEO Vlad Tenev announced Tuesday that the financial services company would lay off about 9% of its full-time employees in the wake of a drop in active users following torrid growth early in the pandemic, sending Robinhood stock plunging nearly 72% in six months.
Robinhood CEO Vlad Tenev in his office in Menlo Park, California.
Kimberly White/Getty Images for Robinhood
The layoffs come ahead of the company’s first-quarter earnings report Thursday after the closing bell.
From 2019 to 2021, spurred by modest interest rates, government stimulus and by pandemic restrictions that boosted app usage, Robinhood grew its employee headcount from 700 to nearly 3,800, Tenev said in a message to employees.
However, this burgeoning headcount created redundant employee roles and introduced an unnecessary level of complexity, prompting the current layoffs, Tenev said.
Robinhood stock—which had already fallen by 3.75% to $10 per share by the close of regular trading Tuesday— fell by 4.8% to $9.52 in after-hours trading shortly after the layoffs were announced.
Tenev said the company would individually contact laid-off employees to discuss “next steps,” and would offer support in the form of separation packages and help with job searching.
Robinhood, which offers commission-free stock and crypto trades via a mobile app, recorded explosive user growth as pandemic lockdowns drove Americans online. After Robinhood entered the public markets via an IPO last July, the company’s stock price rose more than 60% in a matter of days, reaching a high of $70.39 August 4. However, its shares have sunk 85.8% since, hurt by a slowdown in retail trading. Robinhood’s active user base has dwindled from 18.9 million in the third quarter of 2021 to 17.3 million in the last quarter, according to the company’s earnings report. Robinhood’s fortunes were further dampened when Goldman Sachs analyst Will Nance urged investors to sell, saying that Robinhood had a “limited path to near term profitability” due in part to tepid user growth.
“Robinhood Stock Plunge Steepens After Goldman Warns Investors Should Sell Amid ‘Depressed’ User Growth” (Forbes)