Company says it will lay off 9% of employees

Robinhood, an app that popularized free one-click trading of stocks and options, said Tuesday that it was laying off approximately 340 people, or about 9% of its 3,800 employees.

Robinhood CEO Vlad Tenev said in a blog post that the company had essentially overhired in the pandemic. Since 2020, the company’s workforce has grown almost six times, to 3,800 people from 700, leading to duplicate roles and job functions and “more layers and complexity than are optimal,” he said.

Tenev added that “after carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity and ensure that we are responsive to the changing needs of our customers.”

He said the company was strong financially, with $6 billion in cash.

Robinhood did not immediately respond to a request for comment.

The Silicon Valley company has long attracted scrutiny for its commission-free one-click trading, especially of riskier assets such as options. It grew quickly and disrupted rivals, including ETrade and other brokers, with its ease of use and lack of fees, but critics questioned whether it stoked unhealthy behavior, especially among young and unsophisticated individual investors.

In early 2021, Robinhood was caught up in the meme stock frenzy, when groups of individual investors banded together to drive up the prices of some outof-favor stocks, including Gamestop. Many used Robinhood to make their trades.

Robinhood had to halt some trades and raise rounds of emergency funding to cover the collateral needed for its customers’ trades. Tenev’s cellphone was seized by authorities as part of an investigation into the situation. Robinhood was sued more than 50 times, and Tenev was summoned to testify in Congress.

The company went public in July 2021. It lost $3.69 billion last year, although revenue increased 89% to $1.82 billion.