If implemented, it will mark the third round of layoffs for Robinhood in just over one year. The brokerage firm laid off 9% of its workers in April 2022 and 23% in August of the same year.
Robinhood plans to lay off some part of its staff as it seeks to reduce the cost of operations due to the reduction in demand it is experiencing. Many current workers were employed to fill various needed roles during the Covid era. During that time, there was a huge demand for cryptocurrency trading and other Robinhood services, which led to a significant increase in the company’s monthly users.
During the pandemic, many people were able to devote their time to trading, and they also had more money since they were not going out and spending as much as they normally would. Additionally, many benefited from the government’s stimulus checks. The increase in users necessitated an increase in the company’s workforce. As a result, between 2020 and 2021, the number of employees at the company increased from 700 to around 3,800.
Despite having a large customer base during the pandemic, the California-based company has struggled to retain many, resulting in a significant decline in monthly active users.
According to Cointelegraph, a company spokesperson neither confirmed nor denied the news in a comment to the media agency. The spokesperson stated:
“We’re ensuring operational excellence in how we work together on an ongoing basis. In some cases, this may mean teams make changes based on volume, workload, org design, and more.”
Robinhood Had Two Rounds of Layoffs in 2022
This is not the first time Robinhood is laying off staff. If executed, this will be the brokerage firm’s third layoff within one year. In April 2022, it laid off 9% of its workers. The CEO, Vlad Tenev, stated that the layoff was necessary for efficiency and to increase the company’s velocity. He mentioned that there were many roles with overlapping duties, as well as other issues the company needed to address.
In August of the same year, the stock trading company laid off 23% of its staff, primarily those involved in marketing and program management. Tenev, when discussing the second layoff in 2022, mentioned that the first round of layoffs did not go far enough and that the company needed to reduce costs amid inflation.
It is evident that most of the recent layoffs at Robinhood have been a consequence of the hiring spree that took place between 2020 and 2021. The surge in demand for crypto, shares, and other Robinhood services subsided as people had to return to their workplaces, resulting in a drastic reduction in the number of service users. The last two rounds of layoffs affected more than 1,000 employees.
This news comes at a time when the company has just acquired X1 Inc, a financial technology firm, for approximately $95 million. This move aims to diversify the company’s income streams as it seeks to make up for the issues in its primary business.