Events & Resources

Learning Center
Read through guides, explore resource hubs, and sample our coverage.
Learn More
Events
Register for an upcoming webinar and track which industry events our analysts attend.
Learn More
Podcasts
Listen to our podcast, Behind the Numbers for the latest news and insights.
Learn More

About

Our Story
Learn more about our mission and how EMARKETER came to be.
Learn More
Our Clients
Key decision-makers share why they find EMARKETER so critical.
Learn More
Our People
Take a look into our corporate culture and view our open roles.
Join the Team
Our Methodology
Rigorous proprietary data vetting strips biases and produces superior insights.
Learn More
Newsroom
See our latest press releases, news articles or download our press kit.
Learn More
Contact Us
Speak to a member of our team to learn more about EMARKETER.
Contact Us

Robinhood’s troubles continue as disappointing Q2 prompts layoff of nearly a quarter of staff

The news: A $30 million fine and plans to lay off almost one-quarter of its workforce are the latest signs that digital broker Robinhood is struggling.

Bad news comes in threes

1. More job cuts:

  • As part of a restructuring, the trading app will close two offices and slash its headcount by around 23%, or about 780 people. The move follows redundancies made in April when Robinhood let go 9% of its staff.
  • CEO Vlad Tenev blamed the “deterioration of the macro environment,” inflation, and a broader cryptocurrency crash for declining trading volumes.
  • The firm will incur $30 million to $40 million for the restructuring and layoffs and $15 million to $20 million related to office closures, per the same filing.

2. Disappointing earnings:

  • The firm’s Q2 earnings highlighted its changing fortunes over the past year. Revenues declined 44% year-over-year (YoY) to $318 million.
  • Robinhood blamed the “volatile market environment” for falling monthly active users which dropped by roughly one-third to 14 million for June 2022 compared with 21.3 million in the second quarter of 2021.

3. Slapped with a fine:

  • Robinhood was also fined $30 million by New York’s financial regulator for “significant failures” in keeping anti-money laundering and cybersecurity rules.
  • The firm must also retain an independent consultant to evaluate compliance.

What’s behind the decline? Robinhood was hugely successful during Covid lockdowns due to a trading frenzy among amateur investors. But trading cooled as the cost of living increased and interest rates rose, and its share price has plummeted more than 70% since last July.

This year, Robinhood has tried to diversify its offering to counter tumbling volumes, with limited success. Various efforts include:

Robinhood’s extensive efforts to expand its offerings have appeared increasingly desperate as it continues to pursue younger users. It’s not been helped by a wider crypto market slump. But it has also suffered from its narrow focus on a single age demographic and on notoriously volatile products, like crypto and app-based trading.

The big takeaway: Persistent missteps and a wider decline in trading activity have combined to hurt Robinhood. Going forward, digital brokers need to explore revenue-generating avenues more resistant to downturns. If Robinhood is unable to pull out of the ongoing nosedive, it may be better served by seeking a buyout before the year is over. FTX has already been linked to a takeover. If not, Robinhood needs to hunker down, cut costs, and wait for the slumping retail trading market to pick up.

You've read 0 of 2 free articles this month.

Get more articles - create your free account today!