Robinhood cuts about 9% of full-time employees

Retail brokerage Robinhood is downsizing, citing “duplicate roles and functions” after rapid expansion last year.

CEO Vlad Tenev made the announcement in a blog post on Tuesday afternoon. Shares fell more than 5% in extended trading.

This decision will affect approximately 9% of full-time employees. Robinhood reported 3,800 full-time employees as of December 31. The company declined to give further details on the exact number of laid off employees.

“We determined that these Robinhood staff reductions were the right move to improve efficiency, increase our timeliness, and ensure we meet the changing needs of our customers,” Tenev wrote.

“While the decision to take this action was not easy, it is a deliberate step to ensure that we are able to continue to achieve our strategic goals and pursue our mission of democratizing finance,” he added.

Robinhood is expected to release its first quarter results after the bell on Thursday. The blog post didn’t mention those financial results, except that the company had more than $6 billion in cash on its balance sheet.

The company previously said it had $6.25 billion in cash and cash equivalents on its balance sheet at the end of December.

Going forward, the company will review employee growth plans and “continue to prioritize internal opportunities for automation and operational efficiency,” Tenev wrote.

Robinhood rose to prominence in early 2021 as a key player in the GameStop saga, where retail investors bid on so-called meme stocks.

The brokerage saw a surge in new customers and cash and entered the public markets through an IPO in July. However, the stock gained little ground and traded below its IPO price of $38 per share for much of its existence. Shares closed at $10 on Tuesday.

The company lost monthly active users during the fourth quarter, and its first quarter results will face tough comparisons with GameStop mania in the first quarter of 2021.