The online broker Robinhood cut its staff by 9%. CEO Vlad Tenev explained this move as necessary to boost efficiency after losses of $2 billion over the previous two quarters.
During 2020 and the first half of 2021, the startup experienced a period of hypergrowth — the number of non-zero accounts jumped from 5 million to 22 million, with revenue rising from $278 million in 2019 to $1.8 billion in 2021. Such dynamics in key metrics necessitated increasing headcount from 700 to nearly 3,800 people.
\”This rapid growth led to the duplication of some roles and job functions, as well as to unnecessary complexity in the structure\”, — said Tenev.
The staffing optimization will guarantee the continued execution of the mission to democratize finance, he pledged. In 2022, Robinhood will roll out new products in brokerage services, cryptocurrencies, as well as spending and saving products, and will continue its international expansion. The backbone for this will be $6 billion on the balance sheet.
In July 2021, the online broker went public on Nasdaq. From its peak, Robinhood’s stock has tumbled by 88.8%. Since the start of 2022, its market capitalization has fallen by 46.5%.
The Robinhood app gained popularity during the pandemic and the surge of interest in Dogecoin. Trading in the popular meme token in Q2 2021 brought in more than 40% of the company’s revenue.
Subsequent reports recorded a decline in revenues from crypto trading and user activity. Wall Street’s stance toward Robinhood shares could also be affected by risks of SEC regulation changes or a ban on payment for order flow. This practice accounts for the lion’s share of the company’s revenue.
Earlier, Robinhood’s CEO Vlad Tenev named cryptocurrencies the foundation of the company’s future development.
In April 2022, the online broker Robinhood expanded access to beta testing of the cryptocurrency wallet to 2 million clients and announced plans to integrate the Lightning Network in the coming months.
Prior to this, the online broker announced the replacement of debit cards with new Cash Card with cashback in digital assets.
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