Robinhood has increased its staff from 700 to 3,800 employees since the beginning of 2020.
“After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity, and ensure that we are responsive to the changing needs of our customers,” said Tenev.
Going forward, the company will “continue to prioritize internal opportunities for automation and operational efficiency,” Tenev wrote.
Robinhood IPO’d at $38 per share and quickly soared to $85 but has since plummeted. Shares are down 46% so far in 2022, while the S&P 500 has fallen 13%.
Early in April, Goldman Sachs downgraded the company to a sell from neutral, citing headwinds as investors disengage due to falling markets and waning Covid stimulus checks.
“We believe HOOD could continue to see higher levels of churn as these investors leverage their smaller dollar account sizes for everyday spending,” Goldman analysts wrote.
Robinhood tends to appeal to new investors, with average account sizes around $4,000. The average age of its users is 31, and about 50% of those are first-time investors, the company has said, making it more susceptible to user drop-off during economic slowdowns.
Goldman doesn’t see a clear path toward profitability for Robinhood, a bad sign as investors become increasingly skeptical of unprofitable fintech companies.
Shares of the stock were down 5.5% in after-hours trading.