Robinhood’s Tenev Says Retail Dealer Is not In Promoting Himself Regardless of Struggling

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

Brendan McDermid | Reuters

Robinhood CEO Vlad Tenev on Wednesday said the retail brokerage did not want to be acquired despite the announcement of massive layoffs after a quarter of its active users dwindled.

“In short: No,” Tenev said on an investor call when asked about the possibility of being bought by another company. “I think we’re in a great position as an independent company. I love us as an independent company.”

In the May, FTX CEO Sam Bankman-Fried revealed shares in Robinhood, fueling speculation about a potential bid from the crypto-focused brokerage. Bankman-Fried has since said FTX doesn’t want to buy Robinhood outright.

Tenev has said that Robinhood is eyeing 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 the balance sheet we have… to acquire companies to accelerate our path.” , said Tenev.

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

Shares of Robinhood rose 11.7% on Wednesday following the layoff announcement. Some Wall Street analysts said The company’s cost-cutting efforts may be the driving force behind the stock.

Robinhood cut its full-year expense guidance by about $290 million, which includes a projected stock-based compensation of about $70 million. Tenev said that the company plans to have actively adjusted EBITDA – a measure of profitability that doesn’t include certain expenses like interest and taxes – by the end of the year.

The company points to interest rate increases from the Federal Reserve as a source of revenue growth in the form of interest rates. CFO Jason Warnick estimates that every quarter of a percentage point rate hike will generate about $40 million in annual revenue for Robinhood.

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

The chief financial officer also said that the assets under management Robinhood rebounded above $70 billion in July after falling in the second quarter.

Despite Wednesday’s rally, Robinhood’s stock is still down nearly 42 percent for the year and more than 70 percent from its IPO price last year.

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