Robinhood Shares Nosedive as Company Announces Layoffs

Robinhood announced Tuesday that the online broker will lay off 9% of its staff, causing shares of the company's stock to hit a new low.

The company defended its actions by claiming its financial position was strong, but it had too many duplicate job functions.

Robinhood’s workforce had ballooned from 700 to 3,800 employees since the beginning of 2020. Shares of the stock closed at $10 on Tuesday, the lowest price since the company went public last July.

Robinhood’s share price initially launched at $38 per share and rapidly climbed to $85, but has since nosedived. Shares are down 46% so far in 2022.

The online broker has been the darling of new online traders, with average account sizes around $4,000. The average age of its users is 31, half of them being first-time investors.

The company has claimed that the youth and inexperience of its client base exposes it to earnings drops during tough financial times.

What does this mean for me? 

If you have been an online trader for any length of time, chances are you have heard about Robinhood. These layoffs will certainly dent the confidence the trading community has in the broker’s long-term stability. However, if you invest with Robinhood, as long as you can continue to place trades and have access to markets, you should be fine. The company is, after all, regulated by the Securities and Exchange Commission (SEC) in the US, a tier-one watchdog.