Robinhood Layoffs 2022: Stock Price Plunges As 340 Full Time Staff Are Cut

Retail brokerage firm Robinhood Markets Inc. on Tuesday saw a massive drop in its stock price after CEO Vlad Tenev announced it was laying off hundreds of its full-time employees.

Shares of Robinhood closed at $10 Tuesday following news of the layoff, the lowest it has gotten since it went public in July on the Nasdaq under the ticket HOOD. Shares were down 5.5% in after-hours trading, according to an analysis by CNN.

Robinhood went public at $38 per share and later soared to $85. However, the stock price has plummeted by 46% so far this year. The S&P 500 has also fallen by 13%.

The drop in stock price comes after Tenev announced it was laying off 9% of its workforce. In a blog post, the company CEO said they hired ferociously during the pandemic, leading to overlapping job functions and duplicate roles.

"This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal. 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 said in the blog post.

"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."

As of Dec. 31, the company had a total of 3,800 employees. The layoffs mean the firm could be cutting loose 340 full-time workers.

Going forward, Tenev said the company will review employee growth plans and prioritize internal opportunities.

The firm rose to fame in early 2021 amid the surge of COVID-19 cases. Robinhood was also one of the key players in the GameStop saga, where the shares of meme stocks surged, causing amateur traders to bid up heavily shorted stocks and cause massive short squeezes.

Since then, Robinhood’s monthly users dropped to 17.3 million in the fourth quarter of 2021 from 18.9 million in the third quarter. The company is scheduled to release its 2022 first-quarter results on Thursday.