Rapidfire expansion is often a slug, but few have been as large as Robinhood, a trading platform. Despite recent crises of declining crypto revenues, an unwillingness to gain previous traction, and the SEC, Robinhood took a one second drop and announced that it is shrinking a significant part of its workforce.
Robinhood, a trading platform aimed at millennials and non-traditional investors, has expanded to have over 22.7 million accounts and 3,800 employees by the end of 2021.
Massive Expansion Comes With Massive Responsibility
As Robinhood continued its expansion, a number of "duplicate roles and job roles" became financially difficult to maintain, according to the co-founder and CEO.
"Today we made the difficult announcement that we are leaving roughly 9% of our full-time employees," Tenev wrote in a blog post on April 26.
In 2021, the trading platform gained an increase in popularity. Many new investors were quick to sign up for new accounts in order to enter GameStop and other volatile meme stocks.
In July, the company launched an IPO at $38 per share. The stock has decreased by more than 70% and the company's market capitalization has disappeared. A result of the loss of the market cap, Robinhood is planning a future acquisition. Depending on the model of "disrupting," such a move might wreak havoc on users.
'Scrutinizing Our Headcount Growth Targets'
"We are also looking at our sales growth targets, and making sure that we continue to prioritize internal opportunities for automation and operational efficiency that serve our customers," Tenev said. "Doing so allows us to be more resilient in difficult situations, and stronger during the good."
Tenev said it is "anticipating and responding to changes" in the corporate discussions, but the massive letting-go indicates even greater difficulties at the company. Robinhood also said that it is looking for "opportunities for automation and operational efficiency" (in other words, outsourcing jobs that used to be held to machines.)
"We will begin communicating with each of you [departing colleagues] individually to discuss the next steps, including the important assistance we will provide in separation agreements, healthcare, and job search assistance," Tenev said.
Shares in Robinhood aren't working properly.
Following the announcement on Tuesday, April 26, stocks fell in after-hours trading.
Robinhood intends to publish its first-quarter results following the bell on April 28. In January, the company said it expects less than $340 million in first-quarter earnings, down 35% from the same period in 2021.
While analyst opinions on Robinhood are changing over time or on whether or not it has exhausted its early momentum, the firm has been losing revenue in several key components (crypto trading, i.e., ), and is not showing the ability to recover anywhere near the success of 2021. Earlier this month, Robinhood announced users would be able to trade the Shiba Inu cryptocurrency, which saw significant gains last year.
Robinhood's trajectory will be further illuminated by the much-anticipated (or, depending on how you look at it, well-feared) earnings call.
"It's possible that Robinhood is at the end of the tunnel," Bernard Zambonin TheStreet said in April. "It's possible that demand is at large," but it's unclear how the company's revenue is owing to the fact that it's highly sensitive to the performance of the crypto market, and this is in short to medium term.