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Robinhood, the stock-trading app, announced plans to lay off 9% of its workforce in response to the slowing of stock-trading that surged during the pandemic. CEO and co-founder Vlad Tenev shared the announcement with the public in a blog post on Tuesday.
The company saw a massive boom in popularity while many were furloughed or quarantined at home during 2020 and 2021, provoking a hiring wave as they needed all hands on deck. Staff levels grew from 700 to around 3,800. The expansion, however, was too quick, leading to overlapping job functions among other issues, said Tenev.
“This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal. After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity, and ensure that we are responsive to the changing needs of our customers,” Tenev disclosed.
The layoffs mean Robinhood will be letting go of more than 300 workers.
Robinhood shares plunged by more than 5% to a record low, dipping below $10 per share in late trading on Tuesday before experiencing a slight rebound. Shares are down more than 70% from where they debuted.
Experiencing rapid growth in the last two years, Robinhood capitalized on the massive trading interest as the pandemic kept people at home while the government issued stimulus checks, providing extra cash to hundreds of thousands. Momentum has since slowed down, provoking a need for change within the company.
Monthly active users saw a steep decline, dropping from 18.9 million in the third quarter of 2021 to 17.3 million by the fourth quarter. In January of this year, Robinhood projected that its first-quarter revenue will be 35% less than the same period last year.