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Robinhood is letting around nine percent of its full-time employees go, company CEO Vlad Tenev has announced. In a blog post, Tenev said the company grew rapidly throughout 2020 and in the first half of 2021, thanks to several factors that include COVID-19 lockdowns. Robinhood's revenue grew from $278 million in 2019 to over $1.8 billion in 2021, and it hired so many new employees to "meet customer and market demands" that its headcount grew from 700 to nearly 3,800.
Tenev explained that the rapid growth in headcount led to "some duplicate roles and job functions" and the the company decided that reducing its workforce is the right move to improve efficiency. "We will retain and continue to hire exceptional talent in key roles and provide additional learning and career growth opportunities for our employees," he said.
The CEO's announcement comes just as the company's stock hit its lowest closing price ($10) since it went public. As TechCrunch reports, it also comes just before Robinhood announces its first quarter results on April 28th and could be a measure meant to preempt investor disfavor in case its results fall short.
Robinhood is known for pioneering commission-free stock trades and, as Tenev said, skyrocketed in popularity in the early days of the COVID-19 pandemic. However, its practices had previously drawn criticism, as well. In late 2020, the Securities and Exchange Commission fined the company $65 million for "misleading customers about revenue sources and failing to satisfy duty of best execution." It was also hit with a class action lawsuit after it restricted trading on GameStop and other "meme stocks." And in late 2021, the company was targeted by a cyberattack that exposed the data of as many as 7 million users.