Robinhood has announced plans to lay off 9% of its workforce, sending the company’s stock price falling.
Robinhood CEO Vlad Tenev wrote in a blogpost that Robinhood’s financial position was strong, saying the layoffs were a response to over-recruitment that had “led to some duplicate roles and job functions, and more layers and complexity than are optimal.”
Prior to the announced layoffs Robinhood had increased its staff from 700 to 3,800 employees since 2020.
“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,” said Tenev.
Going forward, the company will “continue to prioritize internal opportunities for automation and operational efficiency,” he added.
Tenev’s assurances that the move didn’t reflect the company’s financial position appeared to fall on deaf ears, as the stock closed at $10, its lowest price since Robinhood went public last July.
Robinhood initially soared from its IPO price of $38, rising to a high of $85. This initial momentum was lost though, and the stock settled around the $45 mark for a while before tumbling towards low double digits at the end of 2021.
Simon English, who warned of issues for the company last year, said the drop was expected, with the surge of interest in retail investing waning towards the tail end of the year.
“The markets were flooded with first time investors, looking for something to pass the time whilst locked indoors due to Covid,” said English. “Now that most countries are opening up, only a small percentage of those investors have maintained interest.”
Robinhood played a core role in surge in popularity of so called “meme stocks” such as GameStop that wreaked havoc on the markets at the start of 2021. The rise in interest was short lived however, and Robinhood reported reduced monthly active users last quarter.