Robinhood is letting go 23% of its employees, CEO Vlad Tenev announced in a blog post Tuesday, the mobile-first brokerage’s second round of layoffs this year as it wrestles with a steep decline in customer activity amid a bear market after expanding headcount aggressively in 2021.

The cuts are “particularly concentrated” in Robinhood’s operations, marketing and program management divisions and come as part of a broader organizational restructuring, according to Tenev.

Tenev attributed the workforce reduction to “additional deterioration of the macro environment” in the three months since it cut 9% of its headcount in April, in addition to high inflation and a broad crypto market crash — which has “further reduced customer trading activity and assets under custody.”

The cuts were announced as the company reported a $295 million net loss in the second quarter as sales dropped 44% to $318 million from the same quarter a year ago.

Robinhood’s monthly active users fell 34% from the second quarter of 2021 to 14 million in June.

The company has already notified employees that have been laid off, and those affected can remain with the company through October 1 with regular pay and benefits, in addition to cash severance.

At the end of 2021, Robinhood had 3,800 employees, according to its annual report.

“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,” Tenev wrote in his message. “As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me.”

Founded less than a decade ago, the Menlo Park-based Robinhood aimed to “democratize finance” by enabling investors, often young and new to the field, to trade stocks cheaply and prolifically — without commission fees and on a mobile app. The company grew quickly throughout the pandemic, as more young people stuck at home played the markets. Since going public last year at $38 a share, the company’s stock has fallen to $9.23, down 50% from the beginning of 2022; its founders Tenev and Baiju Bhatt are no longer billionaires, according to Forbes estimates; and Robinhood was on Forbes’ Fintech 50 list in 2021 but dropped off in 2022.

SEC Chair Gary Gensler is seeking to institute a competitive auction system for investor orders, threatening Robinhood’s ability to make money by selling execution of its customers’ trades to market makers, one of the company’s main sources of revenue.

The New York State Department of Financial Services fined Robinhood’s cryptocurrency trading unit for $30 million, alleging the company failed to comply with anti-money laundering and cybersecurity programs, the Wall Street Journal reported Tuesday.

Robinhood Losses Spell The End Of An Era For Young Investors Who’ve Never Traded Through A Downturn (Forbes)

Does Anyone Want To Buy Robinhood? (Forbes)

Robinhood’s Crypto Unit Fined $30 Million by New York’s Top Financial Regulator (The Wall Street Journal)

SEC Chief Takes Aim at Payment-for-Order Flow in Sweeping Plans for Stock Markets (Bloomberg)

[Read More…]