Robinhood fires about a quarter of its staff and closes offices

The sweeping overhaul comes after the trading app reported a second-quarter net loss of $295m

Trading app Robinhood is laying off staff for the second time since April. AP

Robinhood Markets is eliminating about a quarter of its workforce and shutting its offices after a punishing first year as a public company.

The app-based broker dismissed 780 people, or about 23 per cent of staff, and also announced the departure of a top executive on Tuesday.

Reductions were concentrated in operations, marketing and program management functions, chief executive Vlad Tenev said.

A Covid-19 trading boom — including the meme-stock frenzy that drove up shares of GameStop and others — fuelled the company’s drive to an initial public offering in July 2021.

The business quickly slumped, with monthly active users on its app declining and shares slumping.

“I anticipated that what we saw in 2020 and 2021 in terms of market conditions would last longer than it turned out to last, and so that’s on me,” Mr Tenev, 35, said in a conference call with journalists.

“The reality of it was we over-hired, in particular, in some of these support functions.”

The move, which follows an earlier headcount reduction in April, when Robinhood eliminated about 9 per cent of its staff, brings the total number of employees dismissed this year to more than 1,000.

In a separate filing on Tuesday, Robinhood said chief product officer Aparna Chennapragada is leaving the company and that it will close two offices.

The company will incur $30 million to $40m of charges for severance and benefits and $15m to $20m tied to the office closures, the filing said.

The company will transition to a model where “general managers” take broad responsibility for parts of the business to eliminate hierarchies, Mr Tenev said.

Mr Tenev, who founded the company in 2013 with Stanford University roommate Baiju Bhatt, told employees they would receive a Slack message about their status.

Those who are losing their jobs will be allowed to stay with the company until October 1.

Robinhood also reported second-quarter results a day before schedule, saying its net loss for the period was $295m, or 34 cents a share. Net revenue tumbled 44 per cent from a year earlier to $318m.

Robinhood shares, which have lost more than three quarters of their value since the IPO, slid 1.5 per cent on the layoff news but pared back the loss to rise 2.1 per cent to $9.23 in after-hours trading as of 8.40am UAE time.

_______________

Watch: Boy, 12, makes $500,000 creating and selling NFTs online