Robinhood is the Latest Victim of the Crypto Market Crash! Fires Over a Quarter of its Staff!
Robinhood is down its high horse and joining other crypto businesses that are suffering losses
The mythical figure Robinhood may have withstood many hurdles valiantly and never really became the victim himself but it may not be so with the trading platform carrying the same name, and with its stock trading app. The crypto market has lost its sheen and glamour, at least for now, the impact is spreading steadily, and one of the most recent ones to bear the brunt is this firm. In a message to the Robihoodies the CEO and co-founder, Vlad Tenev announced the reduction of the headcount in all sections, but especially in operations, marketing and program management functions.
Robinhood has gained both popularity and notoriety for coming out with a user-friendly interface for cryptocurrency trading and stocks. It would proudly mention that it has 21 million plus active users. The platform which would proudly announce its power to protect the coin investors and to provide them with security through “peace of mind” is itself far from these attributes insofar as its employees are concerned. It is recently in the news for firing about 23 percent of its staff. It comes in the wake of the adverse second quarter of 2021, in which Robinhood’s transaction-based revenue witnessed a slide from US$451 million to US$202 million. If the slide of more than half is unnerving enough there is more to add. The overall revenue is down by 44 percent— from US$565 million in 2021 to US$318 million now.
The lay-off follows the initial decision of Robinhood to restrict it to 9 percent of the workforce as part of enforcing cost discipline in the firm. But the current level of nearly one-fourth of employees being discarded is being justified by Tenev on the basis of three factors: “additional deterioration of the macro environment”, four decade-high rates of inflation, and the most obvious one, the crypto market crash. There is also a passing mention of COVID-19 and the case of ‘overhiring” by him. Employees being laid off will be able to remain employed through 1 October. There is a usual resolve to overcome obstacles and make the company more resilient. No less important, Robinhood’s chief product officer Aparna Chennapragada is also stepping down from her post though she is going to act as an advisor to the CEO or his designee till 2 January 2023.
Somewhat strangely, the formal report of the financial results from the second quarter published by Robinhood seeks to provide a very positive impression of its progress. Tenev says that in the second quarter the company continued to make strong progress on its roadmap and delivered products that would help its customers navigate an environment marked by higher interest rates and rising inflation. He also adds that with the introduction of Stock Lending, extended hours for trading, improved options offerings, new coins, and the announcement of a non-custodial wallet, Robinhood has built an “even better and more robust” customer experience in the first half of the year and looks forward to bringing its customers, additional products and services throughout the remainder of 2022.
Robinhood is not the only victim in the macro scenario of economic slowdown and in the specific development in the form of the downslide in the crypto market. But it definitely is the latest.