Robinhood’s band of merry men is rapidly shrinking, as the investment app’s CEO announced they were laying off 9% of the company in a notice posted to the company’s website.
Robinhood CEO Vlad Tenev wrote that from 2020 through 2021, the company went through a period of “hyper growth” due to low interest rates and fiscal stimulus.
“We grew net funded accounts from 5M to 22M and revenue from approximately $278 million in 2019 to over $1.8 billion in 2021,” Tenev wrote in his post. “To meet customer and market demands, we grew our headcount almost six times from 700 to nearly 3,800 in that time period.”
That rapid increase in employees led to “some duplicate roles and job functions, and more layers and complexity than are optimal,” according to Tenev.
The company CEO said they currently have $6 billion in the bank, and they still expect to expand its brokerage, crypto, and spending/saving services. Yet the company’s shares are at an all-time low, even before the company announced its mass layoffs. Robinhood stocks closed at $10 a share on Tuesday, versus what it originally started at with $38 a share when the company went public in July last year.
Many other companies in the crypto market saw shares fall precipitously on Tuesday. Crypto trading app Coinbase’s stocks are also way below their peak entering this week, and they have apparently been having a rough time all through this year.
Nearly one in 10 employees will be let go with this action, equaling approximately 340 employees, based on the total number of employees Tenev cited in his blog post. The CEO promised separation packages, healthcare, and job search assistance for the departing employees.
The app just recently announced it would be allowing even more types of crypto assets to be sold on its platform, yet that does not seem to have corked the hole of both falling revenue and lost users. CNBC reported Robinhood’s daily users were down to 17.3 million from 18.9 million in the last quarter of 2021.
But the falling stock price belies many other challenges for the app. The app came under fire from both traders and some politicians (AKA the Sheriff of Nottingham) for curbing so-called “meme stocks” trading of Gamestop shares in early 2021. The company was forced to pay one of those laytraders $30,000 for restricting his ability to trade.
Users’ FTC complaints obtained by Gizmodo earlier this year give a sense that there’s a host of unresolved issues that are driving users away. Customers were reportedly unable to withdraw funds from their accounts. Other users reported their accounts were hacked, but they received little-to-no help from the company. Users also complained about the limited availability of tech support on Robinhood’s end. The app did not introduce a phone support system until October of 2021.
The company responded to that article on the FTC complaints saying they were “committed to supporting our customers and offering a safe experience, and we’re confident that the steps we’ve taken over the past two years put us in a strong position to serve our growing customer base.”
Yet time will tell if the townspeople seem inclined to believe the bandit king’s golden-pronged words.