- Robinhood in June announced plans to acquire no-fee credit card startup X1 for $95 million.
- Insiders say credit cards are a new focus as Robinhood tries to address a shrinking user base.
- The company has had ongoing layoffs and is reorganizing internal teams as part of the pivot.
Robinhood is laying off more employees and reorganizing teams as part of a new focus on credit cards as the company tries to mitigate a shrinking user base, insiders say.
In June, Robinhood announced plans to acquire no-fee credit card startup X1 for $95 million. Insiders say the company is planning to merge X1 with its Robinhood Money organization, the subsidiary focused on cash management and spending features of the app like its debit card, direct deposit, and peer-to-peer payments. Credit cards are much higher-margin products than stock-trading and generally less exposed to volatile markets.
A Robinhood spokesperson confirmed after publication that Robinhood made internal changes as a result of the acquisition and laid off what the spokesperson said was a very small number of the 60 employees who joined Robinhood since the acquisition. The company is still hiring and has 200 open roles, the spokesperson said.
The changes come as Robinhood tries to address a shrinking user base. Monthly active users, the company reported, decreased by 400,000 to 10.6 million between July and August.
"This has been causing a bit of panic within executive leadership," one insider said, adding that X1 is Robinhood's "latest pivot to try to get out of that rut."
X1 and Robinhood's future in credit cards were the focus of the company's last all-employee meeting, the person said.
Robinhood in June laid off 150 full-time employees in three organizations, according to an internal memo viewed by Insider: customer experience and platform shared services, customer trust and safety, and safety and productivity. The layoff was widely reported, but audio of an all-hands meeting reviewed by Insider recently showed ongoing cuts have been deeper.
It's unclear when the company made its most recent job cuts. Posts on a private group for people with a Robinhood.com email address on the tech-industry chat app Blind suggests layoffs as recently as Thursday, according to screenshots viewed by Insider.
Last week, after Robinhood released its monthly metrics report for August, JPMorgan analysts said in a research note that performance "seems to once again prove that retail is generally less active in weaker markets as both client engagement and client returns struggled in August." However, August is generally slower for user engagement overall, the analysts noted.
The Menlo Park, California-based Robinhood has been expanding into other businesses for a couple of years. In 2021, it bought Say Technologies, which connects companies with retail shareholders, for $140 million.
"We started with trading and investing. But more recently, we've been helping customers with their comprehensive set of financial needs," Robinhood chief executive and cofounder Vlad Tenev said during an event held by TechCrunch this week. Tenev said he envisions not only allowing people to trade stocks, but "we can help you save for retirement. And we can help you build up an emergency fund."
Shares of Robinhood fell nearly 4% on Thursday while the S&P 500 fell nearly 2%. Robinhood stock has fallen 72% since its stock market debut two years ago.
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