Robinhood cuts a further 23% of its workforce citing “Broad Crypto Market Crash”

Robinhood Markets Inc. (NASDAQ: HOOD), on Tuesday, announced that it will have to lay off a further 23% of its workforce after laying off 9% at the beginning of this year. The online brokerage firm blamed the declining crypto market for the drastic move.

The move means that Robinhood will be laying off almost a quarter of its employees

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The announcement to lay off workers was made on the same day that Robinhood released its Q2 financial results that showed its revenue dropped by 44% year-to-year despite revenue from crypto activities rising modestly.

From the Q2 results, Robinhood made $318 million in net revenue, down 44% year-on-year, although up 6% compared to last quarter’s results. Q2’s net loss was $295 million, which was an improvement from a net loss of $502 million in 2021’s Q2.

The Q2 results also revealed that the monthly active Robinhood users dropped to 14.0 million in June, a drop of 1.9 million from last quarter’s numbers. The assets under custody also dropped by 31% to $64.2 billion.

On the same day, the New York State Department of Financial Services also fined the Robinhood crypto branch a $30 million fine for alleged Anti-Money Laundering, cybersecurity, and consumer protection violations.

Robinhood layoffs impact

The Co-founder and CEO of Robinhood, Vlad Tenev, said that the layoffs would impact all the functions of the online brokerage firm, particularly in operations, program management, and marketing.

The Financial Times estimated the number of affected employees to be around 780 persons.

Tenev said that the layoff at the start of the year did not go far enough especially following the economic conditions and the collapse of the crypto market. Tenev said:

“This has further reduced customer trading activity and assets under custody.”

According to the CEO, Robinhood wrongly assumed that the increased engagement seen during the Covid-19 pandemic could continue but it has turned out to be different. Tenev said:

“As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me.”

Robinhood’s stock was trading at $9.23 at the time of writing, and it has gained +0.59 (6.83%) in five days.