Robinhood continues layoffs as revenue slumps

Yahoo Finance Live anchors discuss second-quarter earnings for Robinhood.

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JULIE HYMAN: Not such a rosy picture for Robinhood. Although, you could quibble, I guess, whether PayPal is gonna be a rosy picture. The stock is trading higher, though. Robinhood announced it is cutting another 23% of its staff. That's a move that comes after the company posted a 44% decline in its revenue in the second quarter.

That 23%, by the way, represents 780 people. In addition to the cuts announced earlier this year, the company has now eliminated about 1,000 jobs or so. So obviously, this continues in the trend of cost-cutting that we are hearing about from these companies.

Vlad Tenev, the CEO, saying, I anticipated that what we saw in 2020 and 2021 in terms of market conditions would last longer than it turned out to last. And so that's on me. That's what you want to hear from the CEO, that they are taking responsibility. He said, the reality of it was we overhired, in particular in some of these support functions.

The company posting a loss, as I mentioned, revenue falling. And monthly active users down by 12% to 14 million. That was a big disappointment.

BRIAN SOZZI: Yeah, I think the market hanging on hopes that Robinhood gets to profitability by the fourth quarter. They played that up a lot on the earnings release. But look, guys, if this was any other company, any other CEO, any other structure, Vlad Tenev is not the CEO of Robinhood anymore. He has badly, badly, badly overestimated demand and mismanaged this company really since the IPO.

Why is he not gonna be out? Because him and the other cofounder are both on the board and they have supermajority voting rights. So it's essentially their company. I believe they control 65% of the vote. So they can do whatever they want.

They can come out here and say, yeah, it's on me. It's on me. They're not going anywhere. They're not at risk of losing their job. But maybe they should.

BRAD SMITH: I think the significant thing here, too, within the active user base that we were talking about a moment ago, is the fact that you only saw net cumulative funded accounts grow by 100,000 sequentially a year. And if there's anything that investors wouldn't want to see with a company like Robinhood, it's any slowing or decelerating of the number of users that they're adding on to the platform, which market volatility, that no doubt is going to have a larger role in the number of people that feel comfortable putting money into the markets.

But that particularly for a growth mechanism, for Robinhood, that is another kind of red flag that they're facing in this interim period of time, regardless of the market volatility. And then additionally, just coming back to the role types that are actually going to be impacted here. It's across operations, marketing, and program management functions as well that they're making the most significant cuts.

BRIAN SOZZI: And you've heard some speculation recently, maybe Robinhood is ripe for acquisition. But I'm looking at the market cap on the Yahoo Finance platform. Let's say about $7.8 billion for only 14 million users on the platform. It still seems like this is an overvalued company relative to the human beings using this platform every single day.