Robinhood has increased its headcount from 700 to 3,800 since the beginning of 2020.
“After carefully considering all of these factors, we have decided that making these cuts to Robinhood employees is the right decision to improve efficiency, increase our speed and ensure we are responsive to the changing needs of our customers,” said Teneff.
Going forward, the company will continue to “prioritize internal opportunities for automation and operational efficiency,” Tenev wrote.
Robinhood’s IPO was at $38 a share and it quickly rose to $85 but has since declined. Stocks are down 46% so far in 2022, while the S&P 500 is down 13%.
In early April, Goldman Sachs lowered the company’s rating to sell from neutral, citing headwinds as investors withdraw due to sluggish markets and waning Covid stimulus measures.
“We believe HOOD could continue to see higher levels of turmoil as these investors take advantage of their smaller dollar account sizes for daily spending,” Goldman analysts wrote.
Robinhood tends to attract new investors, with average account sizes around $4,000. The company said the average age of its users is 31, and about 50% of them are first-time investors, making it more vulnerable to backtracking during the economic slowdown.
Goldman doesn’t see a clear path to profitability for Robinhood, a bad sign as investors become more skeptical of unprofitable fintech companies.
Shares of the stock fell 5.5 percent in after-hours trading.