Financial services platform Robinhood Markets (NASDAQ:HOOD), which enables users to invest in equities, ETFs (Exchange Traded Funds), and cryptocurrencies, has announced a fresh round of job cuts. Per a Wall Street Journal report, HOOD is removing 150, or about 7%, of its full-time employees to drive efficiency amid softness in customer trading activity.
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The report highlighted that the online brokerage fired over 1,000 employees in 2022.
Robinhood witnessed rapid growth during the pandemic-led lockdowns due to fiscal stimulus and lower interest rates. The company increased its headcount following strong customer demand. However, a high-interest rate environment and macro weakness in the post-COVID world led to a massive drop in traffic and trading activity. As a result, the company’s management shifted their focus towards enhancing efficiency by implementing cost reductions, including job cuts.
Active Users Decline for Robinhood
The company recently announced operating data for May 2023. The company’s Net Cumulative Funded Accounts remained flat on a month-over-month basis. However, its MAUs (monthly active users) declined by 8% to 10.6 million from April to May. Moreover, its MAUs decreased by 28% year-over-year.
Following the monthly update on June 12, Goldman Sachs analyst Will Nance said that trading results showed a rebound in May from weakness in April. However, MAUs continued to soften.
Nance added that the monthly report came “modestly ahead” of expectations as management “pointed to continued softening of retail engagement.” Nonetheless, the analyst maintains a Hold on HOOD stock due to the lower activity levels.
What is HOOD’s Price Prediction?
HOOD stock is up about 18% year-to-date. Given the company’s focus on driving efficiency and a slight improvement in trading results in May, popular hedge fund manager Cathie Wood bought 562,818 shares of Robinhood.
While Cathie Wood is optimistic about HOOD stock, Wall Street analysts remain sidelined. It has received two Buy, five Hold, and three Sell recommendations for a Hold consensus rating. Analysts’ average price target of $11.60 implies 20.46% upside potential.
According to TipRanks’ data, Ken Worthington of J.P. Morgan is the most accurate analyst for HOOD stock. Copying Worthington’s trades on HOOD stock and holding each position for one year could result in 92% of your transactions generating a profit, with an average return of 29.26% per trade.
