It’s been a tough year for Robinhood Markets, now laying off nearly a quarter of its workforce and shutting down offices in Arizona and North Carolina.
A year after its initial public offering, the Menlo Park-based brokerage platform is shedding 23 percent of its staff and closing offices in Tempe, Ariz., and Charlotte, N.C., the San Francisco Business Times reported.
In announcing the layoffs, Robinhood CEO Vladimir Tenev shouldered the blame for an “ambitious staffing trajectory”.
“Earlier this year, I announced that we would be letting go of 9 percent of our workforce and focusing on greater cost discipline throughout the organization. This did not go far enough,” Tenev said in a blog post on Aug. 2.
The office closures and employee layoffs are a setback for the brokerage platform that pioneered commission-free stock trading, now an industry standard.
The company blamed soaring inflation, a drop in trading and lower reduced assets under management coupled with a broad crypto crash for the need to cut 23 percent of its staff after laying off 9 percent of its workforce early this year–a reduction of 1,000 workers, counting both rounds.
Robinhood will take cash charges of between $30 million and $40 million on severance and benefits costs, excluding share-based compensation, the company said in a regulatory filing.
The firm expects to incur second-quarter charges of between $15 million and $20 million because of the two office closures and contract termination fees.
It also expects a restructuring will lead to a reduction in share-based compensation of between $40 million to $50 million.
Robinhood was founded in 2013 by Tenev and Stanford University roommate Baiju Bhatt. Monthly active users hit 24 million two months before the IPO and dropped to 14.6 million at the end of May. At the same time, Crypto trading volume plunged 94 percent as Bitcoin prices tumbled and the Terra stablecoin ecosystem collapsed.
– Dana Bartholomew
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