Robinhood announces a new round of layoffs
Robinhood announces the third round of layoffs, Wise reports triple-digit profit growth, and Cathie Wood’s ARK claims to be the first in line for a spot Bitcoin ETF
Hi!
Crypto was supposed to die last year. The industry was not supposed to survive the collapse of Luna, Three Arrows Capital, and FTX. Yet, it did, and now the world’s largest money managers, such as Fidelity and BlackRock, are lining up for licenses to offer a spot Bitcoin ETF to millions of their clients.
Fidelity and BlackRock might not be “crypto-native”, but they surely know how to comply with the securities laws…which is a non-optional part of the game. More on this and other awesome stuff from the world of Fintech:
Robinhood announces the third round of layoffs,
Wise reports triple-digit profit growth, and
Cathie Wood’s ARK claims to be the first in line for a spot Bitcoin ETF
Thank you for reading and have a great week!
Jevgenijs
Robinhood Announces a New Round of Layoffs
The online brokerage firm Robinhood (NASDAQ: HOOD) is laying off approximately 7% of its full-time staff, or about 150 employees in total, the Wall Street Journal reported yesterday. The layoffs are attributed to the company's need to adjust to a slowdown in customer trading activity and to align team structures. This marks the third round of layoffs for Robinhood in just over a year. The affected roles include customer experience, platform shared services, customer trust and safety, and safety and productivity. The company had previously cut over 1,000 jobs in 2022.
Robinhood’s revenue profile changed considerably since the meme stock craziness of early 2021. Thus, in the first quarter of 2023, net interest revenue surpassed transaction-based revenues driven by higher interest rates and increasing balances of uninvested cash (see the chart above). Transaction-based revenue, in turn, has been flat over the last few quarters, which might explain additional layoffs, as the company seeks further efficiencies. The previous rounds of redundancies allowed the company to return to profitability on an Adjusted EBITDA basis.
The company’s operating data suggests that trading volumes in May, compared to April, were higher for equities and options and lower for cryptocurrencies. Equity trading volumes increased 27% MoM to $49.4 billion, volume of traded options contracts increased 29% MoM to 97.5 million, and Crypto trading volumes declined 43% to $2.1 billion. Assets Under Custody increased 6% from April to $81.8 billion, the company’s clients added $1.6 billion in net deposits, bringing the total deposits over the last twelve months to $16.5 billion.
✔️ Robinhood Lays Off About 7% of Its Full-Time Employees
✔️ Robinhood cutting 7% of its full-time employees
Wise Reports Triple-Digit Profit Growth
Money transfer firm Wise (LON: WISE) released preliminary results for the financial year ended March 31, 2023, reporting a triple-digit increase in annual profits due to a surge in active customers and higher interest rates. The company's pre-tax profits for fiscal 2023 reached £146.5 million, a 233% YoY increase from £43.9 million in the previous year. The number of active customers grew by 34% to 10 million, and the transfer volume rose 37% YoY to £104.5 billion. The company attributed its total income growth, which rose by 73% to £964.2 million, to higher interest rates set by central banks worldwide.
The company intends to utilize unexpectedly high interest income to provide further incentives to its clients, such as higher interest rates on account balances, to drive growth. Wise expects its income to grow by 28-33% in Fiscal 2024 (year ending March 31, 2024), and it anticipates a compound annual growth rate (CAGR) of more than 20% over the medium term. The company also aims to maintain an adjusted EBITDA margin of at least 20% over the medium term, with Fiscal 2024 potentially exceeding the target due to a higher proportion of interest income. Wise stock advanced 16.37% yesterday.
In May, the company’s Chief Financial Officer, Matt Briers, announced that he will step down from his position by March 2024. Briers, who joined Wise in 2015, had previously taken a leave of absence due to a bike accident. The company has initiated a search for a new CFO, and Briers will continue to serve in his role until the next year. The company’s co-founder and CEO, Kristo Kaarman, will take a sabbatical to spend time with his family between September and December this year. During his absence, Wise's Chief Technology Officer, Harsh Sinha, will assume the role of the CEO.
✔️ Wise sees profits soar amid customer boost and rising interest rates
✔️ Wise shares spike 16% as higher interest rates help fintech triple profits
ARK Claims to Be First in Line for Spot Bitcoin ETF
According to Bloomberg, Cathie Wood's ARK Investment Management claims to be the first in line for approval of a spot Bitcoin Exchange-Traded Fund (ETF), despite speculation that BlackRock (NYSE: BLK) may be ahead in the race. BlackRock, the world’s largest asset manager, unexpectedly filed for a spot Bitcoin product earlier this month, causing a stir in the crypto markets. ARK, in co-operation with 21Shares filed an application for a spot Bitcoin ETF in April, and now stands ahead of BlackRock, according to ARK’s analysts.
Fidelity Investments, another prominent asset manager that serves over 43 million customers and has $4.5 trillion in assets under management, is expected to file for a spot Bitcoin ETF with the U.S. securities regulator as soon as this week, according to The Block. This move by Fidelity follows recent filings by other major money managers such as BlackRock, WisdomTree, Invesco, VanEck, and Bitwise, who have also applied for spot Bitcoin ETFs with the SEC. These filings have contributed to a surge in the price of Bitcoin, reaching a high of over $31,000 on June 23.
Investing in a spot Bitcoin ETF (ETF that owns Bitcoins, not derivatives based on Bitcoin price) offers numerous advantages over investing directly in Bitcoin. It eliminates the complexities of purchasing and storing the cryptocurrency (which typically requires registration with a dedicated cryptocurrency exchange), provides regulatory oversight and transparency, and offers the convenience of trading on traditional stock exchanges. Moreover, passively-managed ETFs usually charge fees that are considerably lower than fees currently changed by crypto exchanges.
✔️ Cathie Wood’s ARK Says It’s First in Line for Spot-Bitcoin ETF
✔️ Fidelity preparing to submit spot bitcoin ETF filing
✔️ BlackRock files for bitcoin ETF in push into crypto
Speaking ot crypto…stocks of Bitcoin miners are doing really well this year, strongly outperforming both, Bitcoin and Nasdaq Composite Index. Marathon Digital (NASDAQ: MARA) stock is up 291% YTD, Hut 8 Mining (NASDAQ: HUT) is up 248%, and Riot Platforms (NASDAQ: RIOT) is up 243%.
Group Product Manager, Business Account Experience
@ Wise
🇬🇧 London, United Kingdom
Group Product Manager, North America
@ Wise
🇺🇸 Austin, TX, United States
India Expansion Lead
@ Wise🇮🇳 Mumbai, India
Fintech Research Associate
@ ARK Investment Management🇺🇸 St. Petersburg, FL, United States
Digital Assets Product Owner, Wallet & Blockchain
@ Fidelity Investments
🇺🇸 Multiple locations in the United States
Cover image source: Robinhood
Disclaimer: Information contained in this newsletter is intended for educational and informational purposes only and should not be considered financial advice. You should do your own research or seek professional advice before making any investment decisions.