Robinhood’s Tenev Says Retail Brokerage Firm Not Interested in Selling Itself Despite Difficulties

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

Brendan McDermid | Reuters

Robinhood CEO Vlad Tenev said Wednesday that the retail brokerage is not going to be taken over, despite announcing massive layoffs after dropping active users by another quarter.

“In a word: no,” Tenev said during a phone conversation with an investor when asked about a potential acquisition by another firm. “I think we are in a great position as a separate company. I love us as a separate company.”

In May, FTX CEO Sam Bankman-Fried disclosed its stake in Robinhood, sparking speculation about a potential takeover bid from the cryptocurrency-focused brokerage. Bankman-Fried has since said that FTX has no intention of buying Robinhood outright.

Tenev said Robinhood was looking for potential acquisitions of its own. At the end of the quarter, the company reported $6 billion in cash on its balance sheet.

“We actually see opportunities, especially in this market environment, to use the balance sheet we have … to acquire companies that will accelerate our roadmap,” Tenev said.

Robinhood’s investor appeal came the day after the company announced its lay off 23% of their workforce. The company also reported a smaller-than-expected loss in the second quarter, but monthly active users declined and revenue was down more than 40% year-on-year.

Shares of Robinhood rose 11.7% on Wednesday after announcing the layoffs. Several Wall Street analysts have said that company’s cost-cutting efforts could be a boost to stocks.

Robinhood cut its full-year spending forecast by about $290 million, including a cut in expected share-based compensation by about $70 million. Tenev said the company plans to have a positive adjusted EBITDA by the end of the year, a measure of profitability that excludes certain costs such as interest and taxes.

The company cited the Federal Reserve’s rate hike as a source of growth in interest income. CFO Jason Warnick has calculated that every quarter of the interest rate increase brings in about $40 million in annual revenue for Robinhood.

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

The CFO also said that Robinhood’s custody assets topped $70 billion again in July after declining in the second quarter.

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