Robinhood lays off an additional 780 employees as the crypto contagion spreads
(Kitco News) - The fallout from the crypto market collapse in the second quarter continues to spread as the popular online brokerage firm Robinhood announced on Tuesday that it would be laying off approximately 23% of its staff "as part of a broader company reorganization into a General Manager (GM) structure."
Robinhood CEO Vlad Tenev shared the update with Robinhood employees during a company wide meeting, informing the group of "Robinhoodies" that they would receive a Slack message once the meeting was completed letting them know their status.
Tenev cited a deterioration in the global macro environment, the highest level of inflation in 40 years and the broad crypto market crash as reasons for the need to cut back on expenses.
According to the announcement, employees from all departments at the company will be impacted but the majority of changes will be "concentrated in our operations, marketing, and program management functions."
A total of 780 employees are expected to receive their walking papers in this latest round of downsizing which follows a 9% reduction in staff at the firm in April.
Along with multiple external factors that have contributed to weakness in both the crypto and traditional markets, Tenev indicated that this reduction is largely the result of overstaffing and placed the blame squarely on his shoulders.
|Another setback for Solana as users lose $8 million in assets following the latest exploit|
"Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022. In this new environment, we are operating with more staffing than appropriate. As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me," Tenev said in the blog post.
News of the cost-cutting layoffs had a positive effect on the price of HOOD, which surged 16.42% at the market open on Wednesday to hit a daily high of $10.75 before pulling back to $10.43.
This development follows the Tuesday release of the company’s quarterly financial results which revealed a 44% year-on-year decline in net revenue to $319 million with a net loss of $295 million.
Cutbacks across the crypto ecosystem
Robinhood is far from the only firm that has had to tighten its belt as a result of the onset of crypto winter.
In June, the top U.S.-based cryptocurrency exchange Coinbase revealed that it would be laying off 18% of its workforce, or 1,100 employees, as part of "a restructuring plan to manage its operating expenses in response to current market conditions and ongoing business prioritization efforts."
Other notable firms that have announced staff reductions in recent months include the nonfungible token (NFT) marketplace OpenSea which laid off 20% of its workforce in July, the cryptocurrency exchange Gemini which has undergone a 10% staff cut, and a 15% decline in employees for the crypto mining company Compass Mining.