The free broker Robinhood is no longer popular, and the group is laying off more than 750 employees

(BFM Bourse) – The fee-free broker’s active users are falling as retail investors’ interest in stocks and cryptocurrencies has largely waned with the market downturn. Robinhood will thus lay off almost a quarter of its workforce after an initial wave of layoffs last April.

US online brokerage platform Robinhood is set to lay off 23% of its employees, or more than 750 employees, as interest in the stock market and cryptocurrencies has largely waned due to the boom during the pandemic.

“Last year we recruited on the assumption that the appetite for the stock market and cryptos seen in the Covid era would continue in 2022,” CEO Vlad Tenev explained in a letter to employees posted on the blog company was published.

The California-based company had already laid off around 9% of its workforce at the end of April after the number of active users fell by 8% between the third and fourth quarters of 2021. It also said it would focus on cost control. “It wasn’t enough,” notes Vlad Tenev in his letter to the “Robinhoodies” (the “Robinhoodiens,” a pun between Robin Hood and “hoodie,” meaning hoodie).

“Since then, we have seen the macroeconomic environment deteriorate even further, with the highest inflation in 40 years accompanied by a crypto market meltdown,” he explains. “This has further reduced our customer base and assets under our control.”

The platform, which went public a year ago, employs around 2,600 people after laying off a total of around 1,100 people. This second wave of layoffs affects all trades, but above all operations and marketing, said the boss.

Sales down 44% in one year

According to its quarterly results released on Tuesday, the service had about 15 million monthly active users at the end of June, down 28% year over year. Sales plummeted 44% within a year.

In light of the cryptocurrency crisis, several investment platforms specializing in these volatile currencies have recently filed for bankruptcy. And more generally, given the unfavorable economic environment, many technology companies have slowed the pace of hiring or firing.

Shopify, an online selling platform, announced last week that it was laying off 10% of its employees, or about 1,000 employees, as the mass adoption of e-commerce during lockdown didn’t result in a change in habits as quickly as it had hoped.

A $30 million fine

Although short, Robinhood’s history has already been marked by several controversies. Its founders have reiterated that they want to “democratize access to finance,” but their economic model is worrying, given that the platform funds the lack of commissions by subcontracting their large volumes of work to intermediaries who remunerate them. A legal practice, but opaque and potentially a source of conflicts of interest.

On Monday, a New York financial services regulator fined its cryptocurrency business $30 million for violating money laundering and cybersecurity laws.

“We have made significant progress in establishing cybersecurity and compliance programs, and we will continue to make this work a priority on behalf of our clients,” responded Cheryl Crumpton, a Robinhood attorney contacted by AFP. “We continue to pride ourselves on offering a more accessible and cheaper platform to buy and sell crypto,” she added.

Robinhood rose to global prominence in January 2021 during the GameStop saga, in which thousands of small shareholders drove the shares of this chain of video game stores from $17 to almost $500 in a matter of days. Unable to keep up with the flow of orders, Robinhood had to block certain transactions at the risk of imploding itself, provoking the wrath of many stockbrokers.

The company’s stock is down almost half its value year-to-date and 70% since its IPO in July 2021.

(With AFP)

SS – ©2022 BFM Stock Exchange

Kaddouri Ismail

I am Ismail from Morocco, I work as a blogger and online marketer. I am also the founder of the “Mofid” site, in which I constantly publish many important articles in the field of technology, taking advantage of more than 5 years of experience working in the field. I focus on publishing in a group of areas, the most important of which are programming, e-marketing, digital currencies and freelance work.

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