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Robinhood (HOOD) to Cut 7% Full-Time Jobs Amid Trading Slowdown
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In an effort to save costs amid a slowdown in customer trading activity, Robinhood Markets, Inc. (HOOD - Free Report) is slashing the jobs of about 7% of its full-time employees. With these layoffs, the online brokerage firm will cut jobs for the third time in a year. The news was first reported by the Wall Street Journal.
During the pandemic, when the retail trading business was on a boom (driven by extreme market volatility), Robinhood played a crucial role.
However, now, as the demand for trading eases gradually, and the prices of equities and cryptocurrencies decline, the online broker seems to be struggling with shrinking profit margins.
Last year, HOOD cut more than 1,000 jobs in two rounds of layoffs.
The latest job cut announcement comes just a week after the company agreed to acquire X1 Inc., a platform that offers a no-fee credit card with rewards on each purchase. The acquisition, valued at approximately $95 million in cash, is expected to be finalized in the third quarter of 2023.
Through the strategic move, HOOD aims to expand its product offerings and diversify its revenue streams.
The acquisition represents a significant step for HOOD as it seeks to broaden its product offerings and deepen its relationship with customers. It also demonstrates the company’s adaptability to market conditions and commitment to long-term sustainability.
The move is crucial, given the slowdown in crypto trading and declining performance in its core trading business. By diversifying its business and revenue streams, the company aims to counter these challenges and drive growth.
Over the past six months, shares of HOOD have rallied 25% against an 11.9% decline of the industry.
In addition to the decline in trading activities, the overall investment banking (“IB”) business has been suffering for almost a year now. Amid a decline in total deal volume and deal values, most finance firms have announced job cuts across their IB divisions.
JPMorgan (JPM - Free Report) is slashing 40 IB jobs in North America as part of a global workforce reduction plan. Per a source familiar with the matter, the cuts are going to impact all positions, seniors and juniors. Last week, JPMorgan axed 20 IB positions across the Asia region.
In May, the Wall Street giant eliminated 500 roles across various departments. In the same month, it announced plans to lay off 1,000 employees from the First Republic Bank, which was acquired by JPM in early May after it was seized by regulators. Those job cuts were part of the integration process.
Earlier this month, it was reported that Citigroup (C - Free Report) would likely cut 30 IB jobs and 20 more in its corporate banking unit in London. Per a person familiar with the matter, the cuts are necessary to reduce its cost base as the bank navigates through adverse market conditions that are dampening top-line growth.
This March, Citigroup initiated a round of job cuts, slashing hundreds of jobs across the firm, which accounted for less than 1% of its total workforce, per a Bloomberg report. According to people familiar with the matter, the company’s IB division, its operations and technology organization, and the U.S. mortgage-underwriting division were among those affected.
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Robinhood (HOOD) to Cut 7% Full-Time Jobs Amid Trading Slowdown
In an effort to save costs amid a slowdown in customer trading activity, Robinhood Markets, Inc. (HOOD - Free Report) is slashing the jobs of about 7% of its full-time employees. With these layoffs, the online brokerage firm will cut jobs for the third time in a year. The news was first reported by the Wall Street Journal.
During the pandemic, when the retail trading business was on a boom (driven by extreme market volatility), Robinhood played a crucial role.
However, now, as the demand for trading eases gradually, and the prices of equities and cryptocurrencies decline, the online broker seems to be struggling with shrinking profit margins.
Last year, HOOD cut more than 1,000 jobs in two rounds of layoffs.
The latest job cut announcement comes just a week after the company agreed to acquire X1 Inc., a platform that offers a no-fee credit card with rewards on each purchase. The acquisition, valued at approximately $95 million in cash, is expected to be finalized in the third quarter of 2023.
Through the strategic move, HOOD aims to expand its product offerings and diversify its revenue streams.
The acquisition represents a significant step for HOOD as it seeks to broaden its product offerings and deepen its relationship with customers. It also demonstrates the company’s adaptability to market conditions and commitment to long-term sustainability.
The move is crucial, given the slowdown in crypto trading and declining performance in its core trading business. By diversifying its business and revenue streams, the company aims to counter these challenges and drive growth.
Over the past six months, shares of HOOD have rallied 25% against an 11.9% decline of the industry.
Image Source: Zacks Investment Research
Currently, Robinhood carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Layoffs by Other Finance Firms
In addition to the decline in trading activities, the overall investment banking (“IB”) business has been suffering for almost a year now. Amid a decline in total deal volume and deal values, most finance firms have announced job cuts across their IB divisions.
JPMorgan (JPM - Free Report) is slashing 40 IB jobs in North America as part of a global workforce reduction plan. Per a source familiar with the matter, the cuts are going to impact all positions, seniors and juniors. Last week, JPMorgan axed 20 IB positions across the Asia region.
In May, the Wall Street giant eliminated 500 roles across various departments. In the same month, it announced plans to lay off 1,000 employees from the First Republic Bank, which was acquired by JPM in early May after it was seized by regulators. Those job cuts were part of the integration process.
Earlier this month, it was reported that Citigroup (C - Free Report) would likely cut 30 IB jobs and 20 more in its corporate banking unit in London. Per a person familiar with the matter, the cuts are necessary to reduce its cost base as the bank navigates through adverse market conditions that are dampening top-line growth.
This March, Citigroup initiated a round of job cuts, slashing hundreds of jobs across the firm, which accounted for less than 1% of its total workforce, per a Bloomberg report. According to people familiar with the matter, the company’s IB division, its operations and technology organization, and the U.S. mortgage-underwriting division were among those affected.