Vlad Tenev, CEO and co-founder of Robinhood Markets, Inc., is shown on a screen during his company’s IPO at the Nasdaq Market location in Times Square in New York City, U.S., July 29, 2021.
Brendan McDermid | Reuters
Robinhood CEO Vlad Tenev said on Wednesday that the retail brokerage is not looking to be acquired despite announcing major layoffs after another quarter of active users shrank.
“In one word: No,” Tenev said on an investor call when asked about another firm that could have been bought. “I think we’re in a great position as an independent company. I love us as an independent company.”
in May, FTX CEO Sam Bankman-Fried revealed a stake in Robinhood, sparking speculation about a possible takeover bid from the crypto-focused brokerage. Bankman-Fried has since said that FTX is not looking to buy Robinhood outright.
Tenev said Robinhood was on the lookout for potential acquisitions of its own. The company reported $6 billion in cash on its balance sheet at the end of the quarter.
“We really see opportunities, especially in this market environment, to leverage our balance sheet … to acquire companies that will accelerate our work plan,” Tenev said.
The call to Robinhood’s investor came a day after the company announced it was Laying out 23% of their workforce. The company also reported a smaller-than-expected loss for the second quarter, but monthly active users declined and revenue fell more than 40% year-over-year.
Robinhood shares rose 11.7% on Wednesday after the layoff announcement. Some Wall Street analysts said the the company’s cost-cutting efforts could boost the stock.
Robinhood cut full-year expense guidance of about $290 million, including a reduction of about $70 million in share-based compensation. Tenev said the company plans a positive adjusted EBITDA – a measure of profitability that excludes certain costs such as interest and taxes – by the end of the year.
The company cited rate hikes from the Federal Reserve as a source of interest income growth. Chief Financial Officer Jason Warnick estimated that each quarter of a percentage point rate hike translates into about $40 million in annual revenue for Robinhood.
“The exact benefit of rate hikes will depend on how customer balances and rates change over time,” Warnick said.
The CFO also said Robinhood’s assets under custody rose above $70 billion in July after declining in the second quarter.
Despite Wednesday’s rally, Robinhood stock is still down nearly 42% for the year and more than 70% from where its IPO was priced last year.