Robinhood shares plummet as company announces layoffs

Apr 26, 2022, 5:56 PM | Updated: Jun 8, 2022, 3:16 pm

(CNN) — Robinhood CEO Vlad Tenev announced Tuesday afternoon that the online trading platform will lay off 9% of its workforce as shares of the company’s stock hit a new low.

In a blogpost, Tenev wrote that Robinhood’s financial position was strong, with over $6 billion in cash on its balance sheet. The layoffs, he said, follow a period of extreme headcount growth that “led to some duplicate roles and job functions, and more layers and complexity than are optimal.”

Robinhood has increased its staff from 700 to 3,800 employees since the beginning of 2020.

“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,” said Tenev.

Going forward, the company will “continue to prioritize internal opportunities for automation and operational efficiency,” Tenev wrote.

Shares of the stock closed at $10 on Tuesday, the lowest price since the company went public last July.

Robinhood IPO’d at $38 per share and quickly soared to $85 but has since plummeted. Shares are down 46% so far in 2022, while the S&P 500 has fallen 13%.

The company played a key role in the early 2021 surge in meme stocks like GameStop that retail investors, armed with stimulus checks and increased unemployment payments, poured into. But the surge was short lived, and Robinhood reported a loss in monthly active users last quarter.

Early in April, Goldman Sachs downgraded the company to a sell from neutral, citing headwinds as investors disengage due to falling markets and waning Covid stimulus checks.

“We believe HOOD could continue to see higher levels of churn as these investors leverage their smaller dollar account sizes for everyday spending,” Goldman analysts wrote.

Robinhood tends to appeal to new investors, with average account sizes around $4,000. The average age of its users is 31, and about 50% of those are first-time investors, the company has said, making it more susceptible to user drop-off during economic slowdowns.

Goldman doesn’t see a clear path toward profitability for Robinhood, a bad sign as investors become increasingly skeptical of unprofitable fintech companies.

Robinhood is scheduled to release its first-quarter results after the bell Thursday, but Tuesday’s blog post made no mention of them. For its last quarter, the company posted a $423 million net loss.

Shares of the stock were down 5.5% in after-hours trading.

The-CNN-Wire™ & © 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

KSL 5 TV Live

Top Stories

National News

Clarence Gilyard Jr. has died at the age of 66. (Arlene Richie/Shutterstock)...
Toyin Owoseje, CNN

Clarence Gilyard, ‘Die Hard’ and ‘Walker, Texas Ranger’ star, dead at 66

Clarence Gilyard, the actor best known for playing computer hacker Theo in "Die Hard" and naval flight officer Marcus "Sundown" Williams in "Top Gun," has died at the age of 66.
15 hours ago
Sen. Mitt Romney (R-UT) speaks during a Senate Health, Education, Labor, and Pensions Committee hea...
Michael Houck

Mitt Romney calls Trump a ‘gargoyle’ after dinner with Ye, Nick Fuentes

Utah Senator Mitt Romney called former President Donald Trump a gargoyle hanging over the Republican party after his dinner with white supremacist Nick Fuentes and rapper Ye.
15 hours ago
Tea time and Christmastime coincide at The Plaza's elegant Palm Court, where three holiday tea menu...
Marnie Hunter, CNN

15 luxury hotels that go all out for Christmas

These luxury hotels have the most glamorous Christmas decorations of the season.
15 hours ago
BRUSSELS, BELGIUM - OCTOBER 13: Defence ministers and delegates are seen at the start of the North ...

NATO renews membership vow to Ukraine, pledges arms and aid

NATO Secretary-General Jens Stoltenberg says war-torn Ukraine will one day become a member of the world’s largest security alliance
15 hours ago
The McGold Card is back at McDonald's. (McDonald's)...
Jordan Valinsky, CNN Business

McDonald’s is giving people the chance to win free food for life

Beginning December 5, every order completed in the McDonald's app for at least $1 will enter customers into a contest to win a McGold Card.
15 hours ago
A woman in Minnesota loses peripheral vision from apparent exposure to mercury in beauty creams.
Meera Senthilingam, CNN

Mother loses peripheral vision from apparent exposure to mercury in beauty creams

A woman in Minnesota lost part of her vision and inadvertently put her entire household at risk of mercury poisoning, most likely from using beauty creams.
15 hours ago

Sponsored Articles

house with for rent sign posted...
Chase Harrington, president and COO of Entrata

Top 5 reasons you may want to consider apartment life over owning a home

There are many benefits of renting that can be overshadowed by the allure of buying a home. Here are five reasons why renting might be right for you.
Festive kitchen in Christmas decorations. Christmas dining room....
Lighting Design

6 Holiday Decor Trends to Try in 2022

We've rounded out the top 6 holiday decor trends for 2022 so you can be ahead of the game before you start shopping. 
Happy diverse college or university students are having fun on their graduation day...
BYU MBA at the Marriott School of Business

How to choose what MBA program is right for you: Take this quiz before you apply!

Wondering what MBA program is right for you? Take this quiz before you apply to see if it will help you meet your goals.
Diverse Group of Energetic Professionals Team Meeting in Modern Office: Brainstorming IT Programmer...
Les Olson

Don’t let a ransomware attack get you down | Protect your workplace today with cyber insurance

Business owners and operators should be on guard to protect their workplace. Cyber insurance can protect you from online attacks.
Hand turning a thermostat knob to increase savings by decreasing energy consumption. Composite imag...
Lighting Design

5 Lighting Tips to Save Energy and Money in Your Home

Advances in lighting technology make it easier to use smart features to cut costs. Read for tips to save energy by using different lighting strategies in your home.
Portrait of smiling practitioner with multi-ethnic senior people...
Summit Vista

How retirement communities help with healthy aging

There are many benefits that retirement communities contribute to healthy aging. Learn more about how it can enhance your life, or the life of your loved ones.
Robinhood shares plummet as company announces layoffs