Robinhood is laying off roughly 9% of its full-time workforce, the company announced Tuesday.
Following a period of "hypergrowth," the company is cutting down on duplicate roles and job functions as a way to mitigate "more layers and complexity than are optimal," the trading app's CEO Vlad Tenev said in a blog post. Between 2020 and 2021, the company's headcount increased sixfold to keep up with rapid demand, from 700 to nearly 3,800. The decision effects roughly 340 Robinhood employees.
The company is set to report earnings Thursday. Its shares, which have mostly struggled since its IPO in July, fell roughly 5% in after-hours trading in the wake of the announcement.
Tenev said the company plans to prioritize "opportunities for automation and operational efficiency." Robinhood will also take a closer look at its headcount growth targets.
"After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity, and ensure that we are responsive to the changing needs of our customers," Tenev wrote.
The decision comes months after Robinhood reported a loss in active users during the fourth quarter of 2021, falling from close to 19 million to 17.3 million, as well as revenue of $340 million, down 35% compared to the same quarter last year. The company faces a tough comparison in its upcoming earnings report after setting a high bar with the popularity it gained in early 2021 amid the memestock frenzy and crypto trading results juiced by the popularity of dogecoin.
"While the decision to undertake this action wasn’t easy, it is a deliberate step to ensure we are able to continue delivering on our strategic goals and furthering our mission to democratize finance," Tenev wrote in the post.
Robinhood Crypto COO Christine Brown announced her departure from the company last month. The company also hired Steve Quirk, a former TD Ameritrade executive, as chief brokerage officer of its Robinhood Markets business in January.