Shares of Robinhood Markets rose greater than 12% on Wednesday, a day after the commission-free brokerage introduced job cuts and posted a smaller-than-expected quarterly loss in an earnings announcement that got here a day sooner than scheduled.
The Menlo Park, Calif.-based firm noticed income fall 44% within the second quarter ended June 30 as buying and selling volumes eased from final yr’s frenetic tempo when retail traders used its utility to pump cash into so-called “meme stocks.”
Nonetheless, traders took word of Robinhood’s announcement through a weblog submit that it will start one other spherical of layoffs affecting 780 staff, on prime of the 9% of full-time staff laid off earlier this year, and would change its organizational construction to drive higher price self-discipline.
“We consider these price reductions will doubtless drive the corporate to profitability within the close to time period and will drive shares increased,” Goldman Sachs analysts wrote in a word.
Fintech shares together with Robinhood bore the brunt of a broader market decline as a risk-off surroundings coupled with increased funding prices and sluggish e-commerce progress led merchants to tug again from high-growth tech to this point this yr.
Shares of Robinhood, which had been bought at $38 a share in its preliminary public providing final yr, have shed greater than 70% for the reason that firm’s debut on the Nasdaq.
Widespread with different high-growth tech corporations, Robinhood has but to show a revenue since its market debut, though some analysts took Tuesday’s announcement as a optimistic signal that the corporate is on an upward trajectory.
“We consider that after the market digests the ‘shock’ from the layoff’s sheer dimension, traders will shift focus to fundamentals and path to profitability,” Mizuho analysts stated in a Tuesday analysis word.
Robinhood is one among many fintech upstarts which have began slashing jobs forward of an anticipated recession, together with crypto change Coinbase Global, buy-now-pay-later firm Klarna and NFT platform OpenSea.