Robinhood, the app that popularized free one-click stock and options trading, said Tuesday it would lay off about 340 employees, or about 9 percent of its 3,800 employees.
That said Vlad Tenev, CEO of Robinhood a blog post that the company essentially transitioned during the pandemic. Since 2020, the company’s workforce has grown almost six-fold from 700 to 3,800, resulting in duplicate roles and job functions and “more layers and complexity than optimal,” he said.
Mr. Tenev added, “After carefully considering all of these factors, we have concluded that this reduction in Robinhood’s workforce is the right decision to improve efficiency, increase our speed and ensure we are responsive to the changing respond to the needs of our customers.”
He said the company is financially strong with $6 billion in cash.
Robinhood did not immediately respond to a request for comment.
The Silicon Valley company has long been under scrutiny for its one-click, commission-free trading, particularly in riskier assets like options. It grew quickly, disrupting competitors including E-Trade and other brokers with its ease of use and lack of fees, but critics questioned whether it fomented unhealthy behavior, particularly among them young and inexperienced private investors.
In early 2021, Robinhood was trapped “Meme” stock rush, as groups of individual investors banded together to boost the prices of some unpopular stocks, including GameStop. Many used Robinhood to conduct their businesses.
Robinhood had to stop some trades and increase rounds emergency funding to cover the collateral needed for its customers’ businesses. Mr Tenev’s mobile phone was confiscated by authorities as part of an investigation into the situation. Robinhood has been sued more than 50 times and Mr. Tenev has been subpoenaed to testify in Congress.
The company went public in July 2021. It lost $3.69 billion last year, although sales rose 89 percent to $1.82 billion.