Vlad Tenev, CEO and co-founder of Robinhood Markets, Inc. appears on a screen during his company’s IPO at the Nasdaq Market location in Times Square in New York City, the United States, July 29, 2021.
Brendan McDermid | Reuters
Vlad Tenev, CEO of Robinhood, said Wednesday that the retail brokerage firm is not targeting an acquisition, despite announcing major layoffs after another quarter of dwindling active users.
“In a word, no,” Tenev said at an investor call when asked if he might be bought by another company. “I think we’re in a great position as a standalone company. I love us as an independent company.”
In May, FTX CEO Sam Bankman-Fried revealed an interest in Robinhood, sparking speculation about a potential takeover bid from the crypto-focused brokerage firm. Bankman-Fried has since said FTX does not intend to buy Robinhood outright.
Tenev said Robinhood was on the lookout for potential acquisitions of its own. The company had $6 billion in cash on its balance sheet at the end of the quarter.
“We do see opportunities, particularly in this market environment, to use our balance sheet to acquire companies that will accelerate our roadmap,” Tenev said.
Robinhood’s investor call came a day after the company announced it would lay off 23% of its 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 following the announcement of the layoff. Several Wall Street analysts said the company’s cost-cutting efforts could give the stock a boost.
Robinhood lowered its full-year spending guidance by approximately $290 million, which includes a decrease in expected stock-based compensation of approximately $70 million. Tenev said the company plans to have positive Adjusted EBITDA — a measure of profitability that excludes certain costs such as interest and taxes — by the end of the year.
The company pointed to Federal Reserve rate hikes as a source of revenue growth in the form of interest. CFO Jason Warnick estimated that every 1/4 percentage point rate hike would bring Robinhood about $40 million in annual revenue.
“The exact benefit of rate hikes will depend on how balances and customer rates change over time,” Warnick said.
The CFO also said that Robinhood’s assets under custody rose back above $70 billion in July after declining in the second quarter.
Despite Wednesday’s rally, Robinhood’s stock is still down nearly 42% for the year and more than 70% from last year’s IPO.