Commission-free inventory, choices, and cryptocurrency buying and selling platform Robinhood is getting rid of 23% of its workforce as a consequence of dipping revenues and a crypto bear market.

Company CEO blames woes on rising inflation

Vlad Tenev, chief govt for Robinhood, highlighted his plan to scale back 23 % of the corporate’s workforce throughout a assembly earlier this week. The downsizing comes at a time when the corporate had already slimmed down its personnel rely by 9 % again in April.

In Tenev’s view, Robinhood has been overstaffed since 2021 as a consequence of rising investor curiosity in crypto and inventory buying and selling. By the primary quarter of 2022, the corporate had elevated its energy by roughly 700 folks, bringing its complete quantity of staff to three,900. The back-to-back firings will have an effect on 1,100 people related to the corporate’s varied inside operations, together with advertising and marketing and program administration.

The CEO believes that rising inflation, which is currently at 9.1% and falling digital asset costs have pressured the agency to reassess its monetary methods and restructure its workforce. He additionally blamed Wall Street for the choice, including that the inventory market’s latest six-month stretch, which is the worst in over 50 years, has resulted in diminished commerce exercise on the app.

Robinhood’s development numbers have been dwindling

Robinhood’s income is down 44 % to $318 million over the second quarter of 2022 as in comparison with the $565 million reported throughout the identical three-month stretch final 12 months. Commenting on the agency’s ongoing decline, Dennis Kelleher, co-founder of Better Markets, a nonprofit that advocates for monetary reform, acknowledged:

“Robinhood is unique in some ways for having the perfect combination of a successful predatory business model at a time when retail investors’ appetite for participating in the markets was at an all-time high,”

Similarly, Robinhood’s second-quarter earnings present that the agency has minimize down on its advertising and marketing bills by 74 % whereas rising its spending on know-how and growth by 56 %. Also, throughout its peak final 12 months, the agency boasted of an lively buyer base of 18.9 million lively customers. This quantity has come all the way down to 14 million as of June 2022.

Lastly, with fears of a looming recession, a rising quantity of tech corporations have been readjusting their hiring methods. Over the previous few months, distinguished crypto entities, together with Coinbase, BlockFi, and Gemini, have needed to fire hundreds of their staff.

The firm’s future appears to be like bleak

On July 2, Robinhood’s cryptocurrency division was slapped with a fine value $30 million by the New York State Department of Financial Services as a consequence of points with its transaction monitoring system and general safety framework.

Similarly, the corporate got here under the scanner late final 12 months when it froze all trades associated to GameStop shares, citing the safety of its purchasers’ funds. As a outcome, the corporate was investigated by the  U.S. Securities and Exchange Commission.

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