Robinhood’s Tenev says retail brokerage not interested in selling despite struggles

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

Brendan McDermid | Reuters

Robinhood CEO Vlad Tenev said on Wednesday the retail brokerage was not looking for acquisition despite news of major layoffs after another quarter of declining active users.

“In a nutshell: no,” Tenev said on an investor call when asked if he was potentially being bought by another company. “I think we’re in a great position as a standalone business. I like us as a standalone business.”

In May, FTX CEO Sam Bankman-Fried disclosed a stake in Robinhood, sparking speculation of a possible takeover bid by the crypto-focused brokerage. Bankman-Fried has since said that FTX is not looking to buy Robinhood outright.

Tenev said Robinhood is looking for potential acquisitions. 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 leverage the balance sheet we have … to acquire businesses that accelerate our track record,” Tenev said.

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

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

Robinhood cut its full-year spending forecast by about $290 million, which includes a drop of about $70 million in planned stock compensation. Tenev said the company expects 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 said Federal Reserve rate hikes were a source of interest income growth. Chief Financial Officer Jason Warnick estimated that every quarter-percentage-point rate hike translates to about $40 million in annualized revenue for Robinhood.

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

The CFO also said Robinhood’s assets in custody rebounded above $70 billion in July after falling in the second quarter.

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

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