Crypto

Neo-broker Robinhood cuts its workforce again

The trading platform suffers from investor reluctance. This is his second wave of cuts this year.

US online brokerage platform Robinhood will lay off 23% of its staff, or more than 750 people, as interest in the stock market and cryptocurrencies largely waned due to the boom seen during the pandemic. “Last year, we recruited on the assumption that the appetite for the stock market and cryptocurrencies seen in the Covid era will continue into 2022,” boss Vlad Tenev explained in a letter to employees posted on the company blog.

The California-based company already laid off about 9% of its workforce at the end of April after its active user count dropped by 8% between the third and fourth quarters of 2021. She also indicated that she would focus on cost control. “That was not enough,” notes Vlad Tenev in his letter addressed to “Robinhoodie” (“Robinhoodie”, a pun between Robin Hood and “hoodie”, which means hoodie). “Since then, we have witnessed an even worse macroeconomic environment with inflation hitting its highest level in 40 years, accompanied by a crash in the crypto market,” he explains. “This further reduced our customer base and assets under our control.”

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The platform, which went public a year ago, retains about 2,600 employees after laying off a total of about 1,100 people. According to the boss, this second wave of layoffs will affect all professions, but primarily operations and marketing. The service had about 15 million monthly active users at the end of June, down 28% from last year, according to its quarterly earnings report released Tuesday. Its turnover fell by 44% in a year. Faced with the crisis of cryptocurrencies, several investment platforms specializing in these volatile currencies have recently filed for bankruptcy.

And, in general, many technology companies have slowed down the pace of hiring or firing staff, faced with an unfavorable economic situation. Shopify, an online sales platform, announced last week that it was laying off 10% of its employees, or about 1,000 people, because the mass adoption of e-commerce during the quarantine did not lead to such significant habit changes faster than it had hoped. .

$30 million fine

Though short, Robinhood’s history has already been marked by several controversies. Its founders have repeated that they want to “democratize access to finance,” but their economic model is worrisome because the platform finances its lack of commissions by outsourcing its large volumes of orders to intermediaries who reward it. Legal practice, but not transparent and potentially a source of conflict of interest. On Monday, the New York financial services regulator fined its cryptocurrency business $30 million for violating money laundering and cybersecurity laws.

“We have made significant progress in implementing cybersecurity and compliance programs, and we will continue to put this work first for the benefit of our clients,” responded Sheryl Crumpton, a Robinhood lawyer who was contacted by AFP. “We remain proud to provide a more accessible and cheaper platform for buying and selling cryptocurrencies,” she added.

Robinhood rose to global prominence in January 2021 during the GameStop saga, when thousands of small shareholders increased the video game store chain’s shares from $17 to nearly $500 in a matter of days. Unable to manage the flow of orders, Robinhood was forced to block certain transactions, risking an explosion, drawing the ire of many stockbrokers. The company’s shares have lost half their value since the beginning of the year.

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