in decline, Robinhood is once again cutting its workforce

The American online brokerage platform Robinhood, which revolutionized the market with its free model for individuals, will once again cut its workforce, in a context of growing American disinterest in the stock market, but especially in cryptocurrencies, including prices have fallen sharply in recent months.

The redundancy plan covers 750 positions, or almost a quarter of the workforce. “Last year, we recruited on the assumption that the appetite for the stock market and cryptocurrencies observed in the Covid era would continue into 2022”justified the co-founder of the platform, Vlad Tenev, in a letter to employees posted on the company’s blog.

28% drop in users

The Californian company had already cut about 9% of its workforce by the end of April, after seeing the number of active users drop by 8% between the third and fourth quarters of 2021. It also indicated that it would focus on cost control.

But this first purge was obviously not enough. “Since then, we have seen further deterioration of the macroeconomic environment, with inflation at a 40-year high, accompanied by a collapse of the cryptocurrency market. This has further reduced our client activity and assets. our control “explains the Robinhood boss.

According to Tuesday’s quarterly earnings release, Robinhood had around 15 million monthly active users at the end of June, down 28% from a year ago. Its turnover dropped 44% in one year. Faced with the cryptocurrency crisis, several investment platforms specializing in these volatile currencies have recently filed for bankruptcy. And, more generally, many technology companies have slowed the pace of hiring or laid off staff in the face of the unfavorable economic environment.

Turbulent history

Although short, the history of Robinhood has already been marked by several controversies. The platform, whose mission was to “democratization of finance”, was at the center of the controversy related to the insane speculation on meme titles, such as Gamestop, on Wall Street in January 2021. Its business model is also in the crosshairs of supervisors: to guarantee free orders to its customers, Robinhood “sells” to intermediaries, “market makers”, such as the Citadel broker, its order volumes. This “payment for order flow” practice is legal in the United States (this is not the case in France) but is considered opaque and potentially a source of conflicts of interest.

On Monday, the New York Stock Exchange policeman fined Robinhood $ 30 million for violating money laundering and cybersecurity laws on his cryptocurrency business.

Since its IPO in July 2021, the company has lost nearly 80% of its capitalization.

(with AFP)