Third time's a charm? The retail trading company cuts jobs amid declining volumes.
The HOOD laid off 1,000 people in 2022, and about 150 will lose their jobs now.
The decline
in retail investor trading activity has led Robinhood (NASDAQ: HOOD) to conduct
a third round of layoffs within the past year. The pioneer in commission-free
trading for individual investors announced in an internal memo that the
reductions will involve 7% of staff, approximately 150 people.
Robinhood Undertakes Third
Round of Job Cuts
A message
signed by Jason Warnick, the Chief Financial Officer (CFO) of the publicly
traded company, stated that the cuts are necessary to adjust to the current market
volumes.
By the end
of 2022, Robinhood employed 2300 full-time workers, according to the most
recent annual report. Although this number was significantly higher, Robinhood
dismissed a total of 1,000 people in two separate rounds of layoffs. The first
one took place in April 2022 and concerned 8% of the workforce. The second,
much larger cut, occurred in August and reduced employment numbers by almost 800 personnel
(23%).
News of the
third round of layoffs at Robinhood was published yesterday (Monday) by The
Wall Street Journal, which obtained access to the company's internal memo. A
Robinhood spokesperson, commenting on the latest reports, said that the company
continually reviews its operations.
"In
some cases, this may mean teams make changes based on volume, workload,
organizational design, and more," the spokesperson of Robinhood stated in
a written communication.
The
restructuring of employment is mainly expected to involve positions related to
the shared services platform and customer trust and productivity.
However,
Robinhood's share price did not respond to these reports yesterday. On Tuesday,
during off-hours trading on Wall Street, it remained stable. HOOD has been
growing since the beginning of the year by 18% but has dropped nearly 90% from
historical highs.
Tough Months for Robinhood
The news of these job cuts appeared a week after Robinhood acquired X1, a credit card company for $95
million. The purchase, anticipated to close in the third quarter of 2023, will allow
the financial services firm to provide its customers with access to credit
cards.
Robinhood's
purchase of X1 came when the broker witnessed a declining number of monthly active
users (MAU) due to a slowdown in the equities market and rising interest rates.
The company's MAU fell from 11.5 million to 10.6 million in May. Compared to
the same time last year, the number dropped even more, declining 28% from 14.6
million.
The results
for the first quarter of 2023 also were not optimistic. Robinhood reported a
decrease of 208% in net loss. The loss totaled $511 million during the period,
surpassing the $441 million quarterly revenue.
The timing of the acquisition of X1, at a time when retail trading volumes are continually falling, may
indicate that the company is looking for alternative sources of revenue beyond
its core business. Another idea for additional profits is Robinhood Retirement,
a service launched in January 2023. The company confirmed to Finance
Magnates that its customers had committed half a billion dollars towards
their future in individual retirement accounts (IRAs) during the first six
months of the new service.
The decline
in retail investor trading activity has led Robinhood (NASDAQ: HOOD) to conduct
a third round of layoffs within the past year. The pioneer in commission-free
trading for individual investors announced in an internal memo that the
reductions will involve 7% of staff, approximately 150 people.
Robinhood Undertakes Third
Round of Job Cuts
A message
signed by Jason Warnick, the Chief Financial Officer (CFO) of the publicly
traded company, stated that the cuts are necessary to adjust to the current market
volumes.
By the end
of 2022, Robinhood employed 2300 full-time workers, according to the most
recent annual report. Although this number was significantly higher, Robinhood
dismissed a total of 1,000 people in two separate rounds of layoffs. The first
one took place in April 2022 and concerned 8% of the workforce. The second,
much larger cut, occurred in August and reduced employment numbers by almost 800 personnel
(23%).
News of the
third round of layoffs at Robinhood was published yesterday (Monday) by The
Wall Street Journal, which obtained access to the company's internal memo. A
Robinhood spokesperson, commenting on the latest reports, said that the company
continually reviews its operations.
"In
some cases, this may mean teams make changes based on volume, workload,
organizational design, and more," the spokesperson of Robinhood stated in
a written communication.
The
restructuring of employment is mainly expected to involve positions related to
the shared services platform and customer trust and productivity.
However,
Robinhood's share price did not respond to these reports yesterday. On Tuesday,
during off-hours trading on Wall Street, it remained stable. HOOD has been
growing since the beginning of the year by 18% but has dropped nearly 90% from
historical highs.
Tough Months for Robinhood
The news of these job cuts appeared a week after Robinhood acquired X1, a credit card company for $95
million. The purchase, anticipated to close in the third quarter of 2023, will allow
the financial services firm to provide its customers with access to credit
cards.
Robinhood's
purchase of X1 came when the broker witnessed a declining number of monthly active
users (MAU) due to a slowdown in the equities market and rising interest rates.
The company's MAU fell from 11.5 million to 10.6 million in May. Compared to
the same time last year, the number dropped even more, declining 28% from 14.6
million.
The results
for the first quarter of 2023 also were not optimistic. Robinhood reported a
decrease of 208% in net loss. The loss totaled $511 million during the period,
surpassing the $441 million quarterly revenue.
The timing of the acquisition of X1, at a time when retail trading volumes are continually falling, may
indicate that the company is looking for alternative sources of revenue beyond
its core business. Another idea for additional profits is Robinhood Retirement,
a service launched in January 2023. The company confirmed to Finance
Magnates that its customers had committed half a billion dollars towards
their future in individual retirement accounts (IRAs) during the first six
months of the new service.
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
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From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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