Robinhood cutting about 9% of its full time employees

After rapid expansion last year, retail brokerage firm Robinhood is cutting about 9% of its full-time employees. They cited “duplicate roles and job functions” for cutting back such staffing levels. On Tuesday, April 26, Chief Executive Vlad Tenev announced the cutting back plans in a blog post. As this happened, its shares fell more than 5% in extended trading.

Clearly, this step would have an impact on around 9% of full time employees of Robinhood. The firm reported 3,800 full-time employees as of December 31. Moreover, it declined to provide more details on the specific number of employees they are planning to lay off. In the blog post, Tenev stated they were ‘determined’ that making these changes to the retail brokerage firm’s staff is the correct step to enhance efficiency. Along with it, increase its ‘velocity,’ and make sure it is responsive to the constantly changing requirements of its customers.

“While the decision to undertake this action wasn’t easy, it is a deliberate step to ensure we are able to continue delivering on our strategic goals and furthering our mission to democratize finance,” he added.

According to schedule, Robinhood is set to release its first-quarter results following the bell this Thursday. However, the blog post did not specify any financial results besides saying that the firm has over $6 billion in cash on its balance sheet. Previously, the company specified having $6.25 billion in cash and cash equivalents on its balance sheet at the end of December last year. Crypto services proved to be a booming sector for Robinhood,  aiding in boosting revenue. Moreover, 41% of its entire revenue came in cryptocurrencies in the second quarter of 2021.

Subsequently, the retail brokerage firm would review its plans for growth of the company. Moreover, Tenev stated that they would also continue to prioritise internal chances for “automation and operational efficiency.” The company gained prominence in early 2021 as significant players in the GameStop saga, where retail investors bid up what they called ‘meme stocks.’

The firm witnessed a significant flow of new customers and cash, entering the public markets in July by the means of an IPO. But, the stock hardly gained much friction, has traded lower than its IPO price of $38 per share for most of its significance. On Tuesday, the shares closed at $10.

During the fourth quarter, the firm shed monthly active users. Moreover, its first quarter results would face comparison to the mania of GameStop of the first quarter of 2021.