Fintech app Robinhood plans on laying off 9 percent of its staff.
According to TechCrunch, Robinhood has 3,400 employees, meaning these reductions will impact roughly 300 of them. “As you know, throughout 2020 and H1 2021, we went through a period of hyper growth accelerated by several factors including pandemic lockdowns, low interest rates, and fiscal stimulus,” Robinhood CEO Vlad Tenev wrote in a corporate blog posting. “This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal.”
Despite the cuts, Tenev insisted the company’s product roadmap remains intact. “We will continue to accelerate our product momentum through 2022 and will introduce key new products across Brokerage, Crypto, and Spending/Saving,” he wrote. “We will retain and continue to hire exceptional talent in key roles and provide additional learning and career growth opportunities for our employees.”
The layoff announcement drove down Robinhood’s share price, which is already significantly below its IPO levels. Last quarter, the company posted a net loss of $423 million, which its CFO attributed to expenses related to increasing headcount and compensation.
Robinhood enjoyed a surge of popularity during the pandemic as millions of customers used the app to invest in “meme stocks” and other equities. At one point, the app reportedly had 16 million active users, forcing its software engineers to use all their skills to keep everything stable and running. In exchange, those technologists earned generous salaries—levels.fyi, which crowdsources compensation data, estimated that entry-level software engineers could earn nearly $200,000 per year in stock, salary and bonuses.
Given the current turmoil in the markets, fintech companies that emerged during the pandemic—including Coinbase, Stripe, and Square—could face new challenges and a radically changed environment. Those firms will need to lean even harder on their technologists to invent new features and services that will keep users interested—and spending money. If they don’t succeed, the consequences are layoffs and a crashing stock price.