HOOD Stock Treks Higher as Robinhood Cuts 23% of Staff

  • Robinhood (HOOD) stock is rising slightly after the company reported mixed second-quarter results.
  • The company also disclosed that it would dismiss about 23% of its employees.
  • Some analysts believe the news will be positive for HOOD stock.
HOOD stock - HOOD Stock Treks Higher as Robinhood Cuts 23% of Staff

Source: dennizn / Shutterstock.com

Robinhood (NASDAQ:HOOD) stock is in focus today and climbing slightly. Yesterday after the market closed, HOOD stock reported mixed second-quarter results and disclosed it would dismiss about 23% of its employees.

Robinhood’s Q2 revenue came in at $318 million, versus analysts’ average outlook of $314.5 million. Its sales tumbled 44% year-over-year. It reported a loss per share, however, of 34 cents, better than analysts’ mean outlook of a loss per share of 36 cents.

The company’s transaction-based revenues dropped 7% compared with Q1, but its cryptocurrency trading sales rose 7% versus Q1, while its revenue from stocks fell 19% sequentially.

We continue to challenge ourselves to reach a positive run-rate for Adjusted EBITDA by the end of 2022,” the company stated.

On the positive side, Robinhood’s net interest revenue jumped 35% versus Q1, and its EBITDA loss, excluding certain items, improved by $63 million to a loss of $80 million.

Turning to user data, Robinhood monthly active users sank 1.9 million in Q2 versus Q1.

Large-Scale Layoffs at HOOD Stock

In a letter to the company’s employees that was released to the public, Robinhood CEO Vlad Tenev announced that the firm cut its headcount by about 23%. He stated, “While employees from all functions will be impacted, the changes are particularly concentrated in our operations, marketing, and program management functions.”

Tenev blamed the layoffs on “additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.”

A number of analysts praised the layoffs, stating they will boost the company’s bottom line and could increase the price of HOOD stock in the near-term.

“We believe these cost reductions will likely drive the company to profitability in the near term and could drive shares higher,” Goldman Sachs analyst Will Nance predicted.

A $30 Million Fine

The New York State Department of Financial Services, the state’s leading financial regulator, has hit Robinhood with a $30 million fine, The Wall Street Journal reported today. The fine was leveled due to “alleged violations of anti-money-laundering and cybersecurity regulations,” the newspaper stated, adding the judgment marks the first time the agency has punished a company for a violation related to cryptos.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

Article printed from InvestorPlace Media, https://investorplace.com/2022/08/hood-stock-treks-higher-as-robinhood-cuts-23-of-staff/.

©2022 InvestorPlace Media, LLC