Shares of Robinhood Markets rose more than 12% on Wednesday, a day after the commission-free brokerage firm announced job cuts and posted a smaller-than-expected quarterly loss in an earnings announcement a day earlier. provided that.
The Menlo Park, Calif.-based company saw revenue plummet 44% in the second quarter ended June 30 as trading volumes declined from last year’s blistering pace when retail investors used its application to inject money into so-called “meme stocks”.
However, investors took note of Robinhood’s announcement via a blog post that it would begin another round of layoffs affecting 780 employees, in addition to the 9% of full-time staff laid off earlier this year, and change its organizational structure to drive greater cost discipline.
“We believe these cost cuts will likely drive the company to near-term profitability and could drive stocks higher,” Goldman Sachs analysts wrote in a note.
Fintech stocks, including Robinhood, felt the brunt of a broader market decline as a risky environment coupled with higher funding costs and slow e-commerce growth led traders to pull out of high-growth technologies so far this year.
Shares of Robinhood, which sold for $38 a share when it went public last year, have fallen more than 70% since the company debuted on the Nasdaq.
Like other high-growth tech companies, Robinhood has yet to make a profit since its market debut, although some analysts viewed Tuesday’s announcement as a positive sign that the company is on a trajectory. ascending.
“We believe that once the market digests the ‘shock’ of the scale of the layoff, investors will focus on the fundamentals and the path to profitability,” Mizuho analysts said in a research note on Tuesday. .
Robinhood is one of several fintech startups that began shedding jobs ahead of an expected recession, along with crypto exchange Coinbase Global, buy-it-now firm Klarna and NFT platform OpenSea.