Popular no-commission stock and cryptocurrency trading platform company Robinhood Markets Inc. today announced that it’s cutting 9% of its full-time employees because of “duplicated roles and job functions” following its rapid growth in 2021.
Robinhood Chief Executive Officer and co-founder Vlad Tenev announced the news in a blog post, saying that while the decision was necessary, it was not one taken lightly. In the post, Tenev explained how through 2020 and the first half of 2021, Robinhood went through a period of “hyper-growth” accelerated by pandemic lockdowns, low-interest rates and fiscal stimulus.
The company went from five million funded accounts and revenue of $278 million in 2019 to 22 million funded accounts over $1.8 billion in revenue in 2021. Robinhood’s headcount grew from 700 over nearly, 3,800 employees during this time.
“This rapid headcount growth has led to some duplicate roles and job functions and more layers and complexity than are optimal,” Teven said. “After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity, and ensure that we are responsive to the changing needs of our customers.”
Looking forward, Teven noted that Robinhood would review employee growth plans and “continue to prioritize internal opportunities for automation and operational efficiency.”
The announcement of layoffs comes ahead of Robinhood delivering its latest quarterly earnings report on Thursday. Since going public in July at $38 per share, the company has missed expectations in every single earnings report since.
That Robinhood saw extensive growth through 2020 and the first half of 2021 is well known. The company benefited from a surge of interest in Dogecoin – the joke cryptocurrency that it attributed in its IPO filing of accounting for a substantial portion of its growth and the surge of interest in GameStop Corp. shares in February 2021.
The loss of that massive growth continues to hit Robinhood hard, with its share price closing regular trading today at $10 – a 74% drop on its IPO price.
How much the layoffs will assist Robinhood’s bottom line is not clear. Contract buyouts and other payments will result in an increased cost to the company before the cost savings of having a lower number of employees flow through to their bottom line. For the full year of 2021, Robinhood had total operating expenses of 3.456 billion, with operations costs of $373 million and general and administrative expenses of $.137 billion.