Digital assets and equities trading company Robinhood (NASDAQ: HOOD) plans to lay off some of its employees. The company’s co-founder and CEO Vlad Tenev announced that approximately 9% of its full-time staff will be let go in due course.
Tenev explained the company’s rationale for the move in a blog post, stating that the decision was not taken lightly. Explaining the rapid growth in employees the company hired during 2020 and 2021 “went through a period of hyper growth.”
During this period, the company’s headcount increased almost 6x from around 700 to about 3800 at the end of 2021.
“This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal,” Tenev explained in the blog post.
The layoffs is expected to help Robinhood improve efficiency, increase velocity, and ensure that the company can adapt to changing needs of users, according to its executives. Robinhood also promises to provide all the necessary support for employees that will be given the boot due to the decision.
Robinhood’s financials remain rock solid
The announcement is coming ahead of Robinhood’s first-quarter earnings call for 2022, expected today. Tenev hinted that the commission-free brokerages’ financial position remains strong. He wrote that Robinhood has over $6 billion in cash on its balance sheet.
Robinhood is also determined to continue accelerating its various products, including brokerage, digital assets, spending and savings, as well as introduce new features during the year. Additionally, the company is pursuing its international expansion efforts.
Significantly, Robinhood’s Q4 2021 earnings report gave analysts a bleak outlook for the company in 2022. CNBC reported that since rising to prominence in the GameStop short squeeze saga in 2021, trading activity for both equities and digital assets has been declining.
Similarly, the company’s shares were trading at only a fraction of its IPO price, while Robinhood also shed monthly active users during the quarter.
The feature is a major change for the platform. Since launching support for trading digital assets in 2018, users have been limited to only buying and selling their holdings on the platform. With the feature, millions of digital currency holders can now use their holdings across the entire ecosystem. This, coupled with the addition of more digital currencies to the platform, have the potential to drive more users to the platform. This month, Robinhood also signed an agreement to buy Ziglu, a UK-based digital assets firm.
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