The trading platform suffers from investor reluctance. This is his second wave of job cuts this year.
US online brokerage platform Robinhood is laying off 23% of its staff, or more than 750 people, as interest in the stock market and cryptocurrencies has largely waned since the boom seen during the pandemic. . “Last year, we hired on the assumption that the appetite for the stock market and crypto seen in the Covid era would continue into 2022.boss Vlad Tenev explained in a letter to employees posted on the company blog.
The Californian company had already laid off about 9% of its workforce at the end of April, after seeing the number of active users fall by 8% between the third and fourth quarters of 2021. It also indicated that it will focus on cost control. “It was not enough“, says Vlad Tenev in his letter addressed to the “robin hoodies” (to them “robinhoodians», play on words between Robin Hood and «hoodiewhich means hoodie). “Since then, we have seen the macroeconomic environment deteriorate further, with inflation at its highest level in 40 years, accompanied by a slump in the cryptocurrency market.“, details. “This further reduced our client base and the assets under our control.»
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The platform, which went public a year ago, retains some 2,600 employees, having laid off some 1,100 people in total. This second wave of layoffs will affect all trades, but mainly operations and marketing, the chief said. According to its quarterly earnings release on Tuesday, the service had about 15 million monthly active users at the end of June, down 28% from a year ago. Its turnover plummeted 44% in one year. In the face of the cryptocurrency crisis, several investment platforms specializing in these volatile currencies have recently gone bankrupt.
And, more generally, many technology companies have slowed the pace of hiring or firing staff, given the unfavorable economic context. Shopify, an online retail platform, announced last week that it would lay off 10% of its employees, or about 1,000 people, because the mass adoption of e-commerce during lockdowns did not translate into behavior change as quickly as it hoped. .
A $30 million fine
Although brief, the history of Robinhood has already been marked by several controversies. Its founders have repeated that they wantdemocratize access to finance“, but its economic model is worrying, because the platform finances the absence of commissions by subcontracting its large volumes of orders to intermediaries who pay it. A legal practice, but opaque and potentially a source of conflict of interest. On Monday, a New York financial services regulator fined his cryptocurrency business $30 million for violating money laundering and cybersecurity laws.
“We have made significant progress in implementing cybersecurity and legal compliance programs, and we will continue to prioritize this work for the benefit of our clients.“Cheryl Crumpton, a lawyer for Robinhood, contacted by AFP, reacted. “We continue to be proud to offer a more accessible and affordable platform for buying and selling cryptocurrencies.“, she added.
Robinhood rose to worldwide fame in January 2021, during the GameStop saga, in which thousands of small shareholders propelled the shares of this chain of video game stores from 17 to almost $500 in a matter of days. Unable to manage the flow of orders, Robinhood had to block certain transactions, at the risk of imploding, drawing the ire of many brokers. The company’s shares have lost half their value since the beginning of the year.
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