03 Aug 2022 Arjun Agarwal
Robinhood Joins Other Companies In Layoffs; 23% Less Workforce After Trading Drop
One of the most cited names in the retail trading world, Robinhood, joined Coinbase, Crypto.com, as well as several other crypto-oriented companies, as retail traders dropped. Robinhood decided to lay off almost a quarter of its workforce amid a volatile crypto sector and international stock market pressure.
The news was confirmed by Robinhood CEO Vlad Tenev, who noted that a total of 780 employees would lose their jobs at the trading app, which brought a whole wave of new investors to the financial market.
The massive workforce reduction is the second time Robinhood is cutting its headcount, with a 9% workforce reduction in April, but it seems that the move “did not go far enough” in cutting costs, Tenev added on Robinhood’s blog.
Inflation and volatility are the biggest culprits
The highest recorded inflation in the past 40 years, and the Federal Reserve (Fed) counteractions by rapidly raising interest rates have created a very volatile market, which is a big pushback for novice traders, which are Robinhood’s primary customers.
Furthermore, Bitcoin, the world’s largest cryptocurrency made a serious dive from its November 2021 all-time high of almost $64,000 to currently trade at $23,403.10 per BTC.
Bitcoin’s drop also pushed almost every crypto down, while Robinhood customers demanded exposure to one of the most volatile and popular ones, like Dogecoin (DOGE).
The crypto pressure was doubled by the traditional stock market plummeting 20% and even pushing indices like S&P 500 in what's called a bear market.
The havoc caused Robinhood to see its number of monthly average users drop. For instance, June’s active monthly users were around 14 million, down from 15.9 million in March 2022.
Pressure on Robinhood
Another key reason for Robinhood’s user drop is the market anticipation that the platform would make yet another blockbuster move like the GameStop and Dogecoin ones. However, the mania around the stocks and meme tokens fell to a low, and so do Robinhood’s revenues, so the chances of another big hit are slim to none.
The post-COVID situation is also against the trading app since many retail investors simply pulled back from trading in order to save themselves from further market wipeouts.
“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.” Tenev admitted.
The crypto market revives
The situation around Robinhood, however, is not in sync with the latest development in the crypto sector, as Bitcoin and the rest of the sector are steadily increasing their value, with the crypto sector now firmly over $1 trillion.
Most of the crypto projects are seeing double-digit price increases, with several notable examples. Ethereum Classic (ETC), Uniswap (FIL), and Yearn.Finance (YFI) recorded over 30% increases in their value in just a week, while Compound (COMP), Aave (AAVE), and Chainlink (LINK) are close to a 20% increase in the same period.Bitcoin Crypto Market btc crypto market monitoring Bitcoin price cryptocurrency news crypto news Crypto Price Volatility Robinhood