It’s been a tough ride for Robinhood (HOOD) over the past couple of years, and now 23 percent of the staff is facing layoffs. The announcement comes via a press release by Robinhood CEO Vlad Tenev and notes that all while areas will be affected, it will mainly target “operations, marketing, and program management functions.”
Reported on by Ashley Capoot of CNBC, the August 2, 2022 press release from Robinhood goes into some detail about how the company arrived at the decision to lay off almost a quarter of its staff. There were a few elements at play, including the “deterioration of the macro environment”, high inflation, and the assumption that the uptick in retail traders from 2020 would continue into 2022.
Despite already laying off 9 percent of its staff earlier in this year, Tenev notes, “This did not go far enough.” The company had seemingly increased staff under the idea that the COVID-era spike in trading would persist.
For those that will be affected by the layoffs, Robinhood will be keeping them on the team until October 1. During this time, regular pay and benefits will continue. When it comes to being let go, employees will be offered cash severance, payment of COBRA medical, various insurance premiums, and job search assistance. Furthermore, wellness support is being offered.
Tenev notes that Robinhood will also undergo a restructuring. The company is moving to a General Manager structure to “flatten hierarchies, reduce cross-functional dependencies, and remove redundant roles and positions.” More information about the restructuring will be discussed during Thursday’s All-Hands meeting.
This news comes at a time when Robinhood’s crypto division was just fined $30 million by NY regulator. The regulator claims that the cryptocurrency division failed to maintain regulation-compliant cybersecurity programs and also failed to staff effectively to minimize risk. How these new staffing cuts plays into this remains to be seen.