In an unsurprising turn of events, Robinhood will fire nearly a quarter of its employees. The decision is the latest in a growing list of companies reducing their workforce due to uncertain market conditions. Moreover, the company blames the bearish crypto market for a significant loss in revenue opportunity.
Robinhood Axes Wildly
Although there have been many other finance, crypto, and fintech firms cutting jobs, laying off 23% of the workforce is rather steep. it confirms the uncomfortable position Robinhood finds itself in after two years of stellar growth. It is easy for companies to thrive when markets are very bullish, but handling a bear market is a very different ordeal. Robinhood, which recently saw its crypto arm fined by the NYDFS, has now come to realize that.
Following the job cut, the firm will still employ roughly 2,600 people. Everyone knew the firm would reduce its staff in the coming months, although it indicated they would initially cut 9% of the workforce. Pushing that number to 23% is quite steep and confirms the company may need to rethink several business aspects. Aggressively hiring during bullish conditions without giving it much afterthought is a sure-fire way of getting into trouble.
Robinhood CEO Vlad Tenev stated that the cuts will primarily affect the operations, marketing, and program management segments of the company. Interestingly, the firm takes this time to change its operational structure to a general manager-based approach. That will help flatten the hierarchy, reduce cross-functional dependencies, and avoid redundant roles. Perhaps they should’ve taken those steps years ago before firing hundreds of people.
Q2 2022 Results for Robinhood were not too promising. The company saw revenue decrease by over 44% year-over-year. Furthermore, the assets under custody and monthly active users are also dwindling. It is good to see consumers rely less on custodial solutions for investing and trading. Custodians are a central point of failure, and more companies will come to realize that over the coming years.