WSJ headline: Robinhood Lays Off 23% of Staff as Retail Investors Fade From Platform
Subheadline: The job cuts mark the second round of layoffs for the online brokerage, which exploded in popularity during the Covid-19 pandemic
Within the brokerage landscape, Robinhood has found itself more deeply affected by the current market environment. Compared with larger, entrenched players in the industry, Robinhood’s users tend to be younger and have less money in their brokerage accounts. Jason Warnick, Robinhood’s chief financial officer, said Robinhood customers tend to invest in growth stocks and cryptocurrencies. Both categories were hammered by a downturn in markets this year.
In addition to slowing growth, Robinhood has found itself under the watchful eye of regulators. The New York State Department of Financial Services said Tuesday that it imposed a $30 million fine on Robinhood’s cryptocurrency trading unit for alleged violations of anti-money-laundering and cybersecurity regulations.
The company, meanwhile, has encountered questions about the future viability of part of its business model, after Securities and Exchange Commission Chairman Gary Gensler earlier this year outlined a revamp of trading rules that could threaten one of the key ways Robinhood makes money.