Retail brokerage firm Robinhood is reducing 23 percent of its workforce in the second wave of layoffs amid the growing fears of recession.
CEO Vlad Tenev stated that the layoffs would affect staff from all departments, particularly those in operations, marketing, and program management positions.
The announcement came only months after Robinhood laid off 340 people, or around 9 percent of its workforce, in April.
Ever since then, Mr. Tenev stressed the further decline of the economy, including inflation and the collapse of the crypto market, which has “reduced customer trading activity and assets under custody.”
The redundancies are a part of a series of cuts at tech firms, including several cryptocurrency companies.
In June, cryptocurrency exchanges like Coinbase and Gemini announced a reduction in their headcounts.
Shopify, an online marketplace also slashed 10 percent of its 10k employees last week.
Mr. Tenev stated in his memo on Tuesday, August 2, that Robinhood miscalculated the economy and trade activity.
He said: “As C.E.O., I approved and took responsibility for our ambitious staffing trajectory — this is on me.”
On Tuesday, the firm also reported its second-quarter statistics, revealing that its monthly active user count fell to 14 million in June, a 1.9 million fall.
The turmoil is a significant setback for the trading app, which rose to prominence during the meme stock frenzy in early 2021.
On January 27, 2021, GameStop shares closed about 1,800 percent higher than a few weeks earlier, setting a new high.
Then, Robinhood limited trading in certain meme stocks, causing the prices to plummet.
Lawsuits, an investigation by the Securities and Exchange Commission, and congressional hearings followed shortly.
During the meme-stock trading, the stock price of Robinhood skyrocketed.
On August 7, 2021, the corporation was valued at $46 billion, up over 60 percent from the previous week’s price.
However, its stock has dropped by half since the beginning of the year as it deals with the aftermath.
The cutbacks come at a difficult time for financial technology firms.
The total worth of the cryptocurrency market has fallen to around $1 trillion from $3 trillion last year when interest in crypto trading surged and the price of Bitcoin reached a new high.
This year, Robinhood has been attempting to expand its crypto arm, listing new currencies and launching a crypto wallet product.
The company has declined to request comments on the layoffs.
Source: The New York Times