Robinhood stock jumps 12% after cutting employees and with lower-than-expected loss

Robinhood Markets shares rose more than 12% on Wednesday afternoon (3), after the brokerage announced job cuts the day before and a smaller-than-expected quarterly loss.

By 4pm (GMT) the shares were up 12.1% at $10.35 each.

The company’s revenue fell 44% in the quarter ended June 30, as trading volumes slowed from the frenetic pace of the same period last year, when retail investors used the company’s app to pump cash into so-called “meme stocks”. ”.

However, investors have welcomed Robinhood’s decision to cut expenses through another round of layoffs, which will cut headcount by 23% after cutting full-time staff by 9% earlier this year. The company also said it will change its organizational structure to increase cost discipline.

Robinhood posted a net loss of $295 million in the second quarter. Excluding restructuring charges, the company lost $0.32 a share, versus analyst estimates of a loss of $0.37, according to data from Refinitiv’s IBES.

Analysts have highlighted Robinhood’s attempt to rein in its spending, suggesting the move could be positive for stocks.

“We believe these cost reductions are likely to drive the company to profitability in the short term and could lift the stock,” Goldman Sachs analysts wrote in a note.

Robinhood shares, which sold at $38 a share in its initial public offering (IPO) last year, have dropped more than 70% since their debut on the US stock exchange Nasdaq.

Like other high-growth tech companies, Robinhood has yet to turn a profit since its market debut, although some analysts took Tuesday’s announcement as a positive sign that the company is on an upward trajectory.

Robinhood is one of many fintechs that began cutting jobs ahead of an expected economic downturn, along with cryptocurrency exchange Coinbase, buy-now, pay-later company Klarna, and NFT platform OpenSea.