Robinhood (NASDAQ:HOOD) stock is surprisingly inching upward this morning despite news that the trading platform is cutting about 7% of its full-time workforce. This marks the third round of layoffs for the company in recent memory.
What do you need to know about the latest Robinhood layoffs?
Well, according to an internal message verified by The Wall Street Journal, about 150 employees are to be laid off. The job cuts come as a means to “adjust to volumes and to better align team structures,” per CFO Jason Warnick.
That said, there’s plenty of speculation that the layoffs are a means to compensate for slowing revenue. Indeed, Robinhood’s user base has declined substantially from its 2021 highs.
In May, the company reported less than 11 million monthly active users, resulting in a more than 5% year-over-year (YOY) decline in transaction-based revenue in the first quarter of the year.
“We’re ensuring operational excellence in how we work together on an ongoing basis. In some cases, this may mean teams make changes based on volume, workload, org design, and more,” stated a Robinhood spokesperson.
HOOD Stock Climbs on Layoffs
Despite the bearish nature of today’s news, HOOD stock is slightly in the green as of this writing. Robinhood stock is also up about 20% so far this year, trending at around $9.50 per share currently. Unfortunately, though, this still represents a more than 80% decline from its $55 peak recorded in August 2021.
Today’s layoff report comes just days after the online brokerage announced it would acquire credit-card startup X1 for $95 million in cash. This marks Robinhood’s most recent effort to expand its revenue streams beyond brokerage services.
If you recall, Robinhood has cut jobs three times since April 2022. Back in August 2022, the company laid off a staggering 23% of its staff after claiming to have over-hired in the previous year.
At the time, founder and CEO Vlad Tenev took responsibility for Robinhood’s 2021 hiring frenzy. “This is on me,” Tenev stated. Not alone, however, Tenev claimed that the crypto market crash — and general deterioration of the economy — led to the reductions in user activity that required the job cuts.
By the end of 2022, Robinhood had about 2,300 full-time employees, a notable decline from its nearly 3,500 employees reported earlier in the year.
On the date of publication, Shrey Dua did not hold (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.
