August 15, 2022
Robinhood’s Tenev says retail brokerage firm not interested in selling itself despite struggles

Vlad Tenev, CEO and co-founder of Robinhood Markets, Inc., is seen on a screen during his company’s IPO at the Nasdaq Market site in Times Square on July 29, 2021 in New York City, US.

Brendan McDermid | Reuters

Robinhood CEO Vlad Tenev said on Wednesday that the retail brokerage is not getting acquired despite announcing major layoffs after another quarter of shrinking active users.

“In a word: no,” Tenev said on an investor call when asked about potentially being bought by another firm. “I think we’re in a great position as a stand-alone company. I love us as a stand-alone company.”

In May, FTX CEO Sam Bankman-Fried disclosed a stake in Robinhood, prompting speculation about a potential takeover bid from the crypto-focused brokerage. Banksman-Fried has since said that FTX does not want to buy Robinhood outright.

Tenev said Robinhood was looking into a possible acquisition of itself. 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 take advantage of the balance sheets we have … to acquire companies that accelerate our roadmap,” Tenev said.

The Robinhood investor call came a day after the company announced it was laying off 23% of its workforce. The company also reported lower-than-expected losses for the second quarter, but monthly active users declined and revenue declined more than 40% year over year.

Robinhood shares rose 11.7% on Wednesday after the layoffs were announced. Several Wall Street analysts said the company’s cost-cutting efforts could boost the stock.

Robinhood cut its full-year spending guidance by approximately $290 million, which includes a decline of approximately $70 million in expected share-based compensation. Tenev said the company plans to have positive adjusted EBITDA — a measure of profitability that doesn’t include certain costs like interest and taxes — by the end of the year.

The company pointed to rate hikes from the Federal Reserve as a source of revenue growth in the form of interest. CFO Jason Warnick estimated that every one-quarter of a percentage point rate increase translates into about $40 million of Robinhood’s annual revenue.

“The exact benefit of the rate hike will depend on how balances and customer rates change over time,” Warnick said.

The CFO also said that Robinhood’s custodial assets exceeded $70 billion in July after declining in the second quarter.

Despite Wednesday’s rally, Robinhood stock is still down about 42% for the year and more than 70% of where its IPO was priced last year.

Leave a Reply

Your email address will not be published.