Robinhood is cutting nearly a quarter of its workforce. Photo / AP
Robinhood is cutting nearly a quarter of its workforce. Photo / AP
A US online trading platform, which experienced a boom in customers during the pandemic, has slashed its staff by 23 per cent after being hit by the cryptocurrency market crash and record inflation.
It's the second round of staff sackings for the company called Robinhood, which laid off 9 percent of its 3900 employees in April.
Yesterday's announcement saw the company shed 23 per cent of remaining positions — about 815 jobs — meaning the company will have sacked more than 1000 employees in a matter of months between the two rounds of redundancies. Roles in operations, marketing and programme management were the most impacted by yesterday's decision.
Robinhood was embroiled in the Gamestop controversy early last year when Reddit renegades and amateur investors blew up the share price of the brick-and-mortar video game retailers, but this momentum has failed to continue.
Robinhood's chief executive Vlad Tenev said that letting go of 9 per cent the workforce in April to focus on "greater cost discipline" for the organisation "did not go far enough" in a blog post on the company's website.
"Since that time, we have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash. This has further reduced customer trading activity and assets under custody," Tenev said.
"Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the Covid era would persist into 2022.
"In this new environment, we are operating with more staffing than appropriate. As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me."
Last year, Robinhood grew from 700 roles at the end of 2019 to nearly 3900 by the first half of 2021, but its 2022 cuts take its total workforce down to 2600.
Tenev said staff would receive an email and Slack message with their employment status after the companywide meeting announced the redundancies on Tuesday.
He added the cuts were a "painful decision" and meant the company would be "parting ways with many incredibly talented people", although staff would be given the opportunity to remain with the company until October 1.
Robinhood also revealed its second-quarter results which showed its monthly active years plunged to 14 million down by 34 per cent from a year earlier.
Robinhood was embroiled in the Gamestop controversy early last year. Photo / 123RF
Revenue also plummeted by a whopping 44 per cent to US$318 million ($508 million).
Robinhood became a trading phenomenon during the pandemic as it offered an easy to use, mobile first platform and in the second quarter of last year it boasted more than 21 million active users who were keen to trade crypto and meme stocks.
But with lockdowns in the past, revenue tied to customer's trading dropped 55 per cent in the latest quarter to US$202 million ($323 million).
The company has also been slugged with a US$30 million ($48 million) fine from the New York State Department of Financial Service for alleged violations of anti-money laundering and cybersecurity regulation in its cryptocurrency trading unit.
A global tech bloodbath has seen a spate of companies laying off staff.
In Australia a crypto company called Immutable, which valued at A$3.5 billion ($3.8 billion), is facing a fierce backlash after sacking 17 per cent of its staff from its gaming division, while continuing to "hire aggressively" after raising A$280 million ($310 million) in funding in March.
Meanwhile, Australia healthcare start-up Eucalyptus, which provides treatments for obesity, acne and erectile dysfunction fired up to 20 per cent of staff after an investment firm pulled its funding at the last minute.
Debt collection start-up Indebted sacked 40 of its employees just before the end of the financial year, despite its valuation soaring to more than A$200 million ($221 million), with most of the redundancies made across sales and marketing.
Then there was Australian buy now, pay later provider Brighte, that offers money for home improvements and solar power, which let go of 15 per cent of its staff in June, with roles primarily based in corporate and new product development.
Another buy now, pay later provider with offices in Sydney called BizPay made 30 per cent of its workforce redundant blaming market conditions for the huge cut to staffing in May.
Earlier this year, a start-up focused on the solar sector called 5B Solar, which boasts backing from former Australian prime minister Malcolm Turnbull, also sacked 25 per cent of its staff after completing a capital raise that would inject A$30 million ($33 million) into the business.
