Robinhood fires 9% of workforce as shares dip below $10
Online trading firm Robinhood (NASDAQ:HOOD), which shook up the retail brokerage business in the US over the past couple of years with its commission-free model and appeal to a younger generation of trader, is itself being shaken up.
Robinhood co-founder and CEO Vlad Tenev issued a note today (see full text below), indicating that the company would be laying off 9% of its workforce, or about 350 employees.
The changes at Robinhood come on the heels of weak recent results, as well as a steady and continued fall in Robinhood shares. After going public last summer at $38 a share and a brief rise to above $70, Robinhood has seen its share price sink to below $10 for the first time today. In aftermarkets trading Robinhood shares fell further, to about $9.35.
Robinhood’s current share price implies a valuation for the company of $8.7 billion, down from its IPO valuation less than a year ago of $32 billion.
Robinhood share price, IPO to present. Source: Google Finance.
The note issued today by Robinhood CEO Vlad Tenev reads as follows:
April 26, 2022
A Message from our CEO and Co-Founder Vlad Tenev
Robinhood CEO Vlad Tenev shared the below to Robinhood employees following a company-wide meeting to discuss the changes.
Today we made the difficult announcement that we are letting go approximately 9% of our full-time employees. While this decision was necessary, it was not one we undertook lightly, and I’d like to share our rationale.
As you know, throughout 2020 and H1 2021, we went through a period of hyper growth accelerated by several factors including pandemic lockdowns, low interest rates, and fiscal stimulus. We grew net funded accounts from 5M to 22M and revenue from ~$278M in 2019 to over $1.8B in 2021. To meet customer and market demands, we grew our headcount almost 6X from 700 to nearly 3800 in that time period.
This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal. 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.
While the decision to undertake this action wasn’t easy, it is a deliberate step to ensure we are able to continue delivering on our strategic goals and furthering our mission to democratize finance. We will continue to accelerate our product momentum through 2022 and will introduce key new products across Brokerage, Crypto, and Spending/Saving. We will retain and continue to hire exceptional talent in key roles and provide additional learning and career growth opportunities for our employees. And of course, our international expansion efforts will continue to accelerate from here.
Our financial position remains strong with over $6B in cash on our balance sheet. To keep it that way we’re anticipating and being responsive to changes in the way our customers invest- especially during this time of global conflict, economic uncertainty, and high inflation. We are also scrutinizing our headcount growth targets, and making sure that we continue to prioritize internal opportunities for automation and operational efficiency that serve our customers. Doing so enables us to be more resilient in hard times, and stronger during the good.
To our departing colleagues, thank you for all that you have done in support of Robinhood and our mission, and we wish you well in the future. We will begin reaching out to each of you individually to discuss the next steps, including the significant support we will provide around separation packages, healthcare, and job search assistance. To the rest of the team, thank you in advance for your ongoing commitment to Robinhood’s mission and the hard work that will be required to achieve it.
In the seven years since Robinhood launched, we have already disrupted the massive retail brokerage industry in the United States. We did this with a lean team and radical customer focus. I remain steadfast in my commitment to you, to our customers, and our mission, and I will not rest until everyone in the world has access to simple, low cost financial services.