Vlad Tenev, CEO and co-founder of Robinhood Markets, Inc., is shown on screen during his company’s IPO at the Nasdaq Market site in Times Square in New York, 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 declining active users.
“In one word: No,” Tenev said during a call with an investor when asked if it was possible to be bought by another company. “I think we’re in a great position as a stand-alone company. I love us as a standalone company.”
In May, FTX CEO Sam Bankman-Fried disclosed a stake in Robinhood, fueling speculation of a potential takeover bid by the crypto-focused brokerage. Bankman-Fried has since said that FTX does not want to buy Robinhood outright.
Tenev said Robinhood is 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 actually see opportunities, especially in this market environment, to use the balance sheet that we have … to acquire companies that accelerate our roadmap,” Tenev said.
Robinhood’s call to investors came a day after the company announced it was cutting 23% of its workforce. The company also reported a smaller-than-expected loss for the second quarter, but monthly active users were down and revenue was down more than 40% year over year.
Shares of Robinhood rose 11.7% on Wednesday after the layoff announcement. Several Wall Street analysts said the company’s cost-cutting efforts could be a boost to the stock.
Robinhood cut its full-year expense guidance by roughly $290 million, which includes about a $70 million drop in expected stock-based compensation. Tenev said the company plans to have positive adjusted EBITDA — a measure of profitability that excludes certain expenses such as interest and taxes — by the end of the year.
The company pointed to the rise in interest rates by the Federal Reserve as a source of growth in interest income. CFO Jason Warnick estimated that every quarter-percentage-point increase in interest rates translates into about $40 million in annual revenue for Robinhood.
“The exact benefits of rate hikes will depend on how balances and customer rates vary over time,” Warnick said.
The CFO also said Robinhood’s assets under custody rose again above $70 billion in July after falling in the second quarter.
Despite Wednesday’s rally, Robinhood shares are still down nearly 42% for the year and more than 70% from their IPO price last year.