Users Leaving Robinhood | Lays off 7% of Staff | CFO Jason Warnick Stated the Company Cut 1000 Jobs
Robinhood is slashing about 7% of its full-time employees, marking the company’s third wave of layoffs in just over a year. The decision comes as the company faces dwindling customer trading activity and follows the controversial delisting of three major cryptocurrencies, according to the original report from The Wall Street Journal.
Roughly 150 employees are impacted by the cut, the online brokerage firm said in an internal message. The move is part of an effort to “adjust to volumes and to better align team structures,” CFO Jason Warnick stated in the memo.
Last year, the company cut more than 1,000 jobs, leaving it with about 2,300 full-time employees by the end of 2022, according to its annual report. Robinhood’s spokesperson stated the firm is committed to “operational excellence in how we work together on an ongoing basis,” which may involve changes based on volume, workload, and organizational design.
The layoffs primarily impact roles in customer experience, platform shared services, customer trust and safety, and safety and productivity. The firm has faced increased employee departures and reported declines in job satisfaction after previous layoffs.
This latest move follows less than a week after Robinhood announced its acquisition of credit-card startup X1 in a $95 million cash deal, part of its ongoing strategy to expand beyond trading.
Users dropping off
Simultaneously, the company is grappling with a significant drop in monthly active users. As of May, Robinhood had fewer than 11 million users, a substantial fall from the more than 21 million active users during the peak of the Covid-19 pandemic. The first quarter’s transaction-based revenue dropped 5% year over year and was more than halved from the first quarter of 2021.
The financial services company is also facing headwinds from recent actions in the cryptocurrency market. Amidst a crackdown by the U.S. Securities and Exchange Commission (SEC), Robinhood announced it would delist Cardano (ADA), Polygon (MATIC), and Solana (SOL) on June 27. The decision followed SEC lawsuits against Coinbase and Binance, which labeled these tokens as unregistered securities.
The delisting could exert further pressure on the firm’s crypto trading volumes, which reported a year-on-year decline of 30% in May. However, these issues are not unique to Robinhood, with a relatively calm crypto market leading to decreased trading volumes across the board.