Robinhood Cuts 23% of Staff as Brokerage Sees 34% Drop in Monthly Active Users

Robinhood, the popular brokerage app, will lay off about 23% of its staff as customers slow down trading, The Wall Street Journal (WSJ) wrote Tuesday (Aug. 2).

This is the second time the company has made a round of layoffs this year, following a cut of 9% of its employees in April.

The mobile brokerage also released its second quarter results, WSJ wrote, showing a 34% drop in active users year-over-year, to 14 million, and a 44% decline in revenue, to $318 million.

With the two cuts, about 1,000 people are gone from the company. According to CEO Vlad Tenev, there’s a “broader company reorganization” going on and the April layoffs weren’t enough to cut the costs for the company as planned.

“Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022,” Tenev said in a message to employees. “In this new environment, we are operating with more staffing than appropriate. As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me.”

The pandemic was good news for the free, easy-to-use Robinhood app, and shutdowns led to a massive spike in retail stock trading. But as the pandemic ease and people left their homes, and the economy worsened and markets fell, Robinhood lost its customers.

See also: Robinhood Crypto Unit Faces $30M Fine for AML, Cybersecurity Violations

PYMNTS wrote recently that Robinhood’s crypto unit was fined by the New York State Department of Financial Services (NYDFS) for $30 million for violating anti-money laundering (AML) and cybersecurity regulations.

The report said Robinhood Crypto had not maintained and certified “complaint” programs for AML and cybersecurity.

Now Robinhood will have to retain an independent consultant to monitor compliance.

The company, especially with its quick growth, reportedly didn’t maintain “a culture of compliance” and there were several shortcomings in how these programs were managed, the NYDFS said.