(BFM Bourse) – The number of active users of the no-fee broker has decreased as retail investor interest in stocks and cryptocurrencies has dropped significantly as the market declines. And so Robinhood will lay off nearly a quarter of its workforce, after the first wave of layoffs last April.
US online brokerage platform Robinhood plans to lay off 23% of its staff, or more than 750 people, as interest in the stock and cryptocurrency market has fallen significantly from the boom it experienced during the pandemic.
“Last year, we were recruited assuming that the appetite for the stock market and cryptocurrency was observed in the age of COVID In 2022, President Vlad Tenev explained in a letter to employees posted on the company’s blog.
The Californian company had already laid off 9% of its workforce at the end of April, after seeing an 8% drop in active users between the third and fourth quarters of 2021. It also indicated that it would focus on controlling costs. “It wasn’t enough,” Vlad Tenev notes in his letter to “Robinhoodies” (“Robinhoodiens,” the word game between Robin Hood and “hoodie,” which means hoodie).
“Since then, we have seen the macroeconomic environment deteriorate further, with inflation hitting a 40-year high, accompanied by the crash of the cryptocurrency market,” he explains. “This has reduced our customer base and the assets under our control.”
The platform was launched to the public a year ago It retains about 2,600 employees, after laying off about 1,100 people in total. The president said that this second wave of layoffs will take care of all occupations, but primarily operations and marketing.
Business volume decreased by 44% in one year
According to its quarterly earnings release on Tuesday, the service had about 15 million monthly active users at the end of June, 28% less than a year ago. Its sales volume decreased by 44% in one year.
In the face of the cryptocurrency crisis, several investment platforms specializing in these volatile currencies have recently declared bankruptcy. More generally, many technology companies have slowed the pace of hiring or firing employees, in the face of an unfavorable economic context.
Shopify, an online sales platform, announced last week that it was laying off 10% of its staff, or about 1,000 people, because mass adoption of e-commerce during holding periods hasn’t translated into such a rapid change in habits as it is. a wish.
$30 million fine
Despite its shortness, the history of Robinhood has already been marked by many controversies. Its founders have reiterated their desire to “democratize access to finance,” but their economic model is troubling, because the platform funds the absence of commissions by subcontracting large volumes of orders to brokers who reward it. A legal practice, but it is opaque and potentially a source of conflict of interest.
On Monday, a New York financial services regulator fined its crypto businesses $30 million for violating money laundering and cybersecurity laws.
“We’ve made significant progress in creating cybersecurity and legal compliance programs, and we will continue to make this work a priority, for the benefit of our clients,” said Robinhood attorney Sheryl Crompton, contacted by AFP. “We remain proud to offer a cheaper and more accessible platform for buying and selling cryptocurrencies,” she added.
Robinhood rose to global prominence in January 2021, during the GameStop saga, which saw thousands of small shareholders push the stock of this video game store chain from 17 to nearly $500 in just a few days. Unable to manage the flow of orders, Robinhood had to block certain transactions, risking its own collapse, infuriating many stockbrokers.
The company’s stock has lost nearly half its value since the start of the year and 70% since its IPO in July 2021.
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