Robinhood Markets Inc (NASDAQ:HOOD) shares were trading lower by 1.7% to $39.88 early Wednesday, before recovering back. The stock initially fell after the latest employment data signaled a cooling U.S. labor market. Additionally, slowing job growth and wage deceleration signaled weaker retail investor activity, potentially impacting its trading-dependent revenue model.

What To Know: The ADP National Employment Report revealed that private employers added just 122,000 jobs in December, falling short of economists' expectations and reflecting a slowdown in hiring across key sectors like manufacturing and trade.

As a brokerage catering heavily to retail investors, Robinhood's fortunes are closely tied to economic conditions that influence individual trading behaviors. A softer labor market typically dampens disposable income and consumer confidence, potentially curbing trading volumes on Robinhood's platform.

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The report's findings of decelerating wage growth could also mean reduced investor appetite for speculative activity, which has been a critical driver of Robinhood's revenue from order flow.

What Else: Furthermore, the mixed market response to the data—combined with rising Treasury yields and concerns over prolonged Federal Reserve tightening—creates an environment of uncertainty, potentially impacting market volatility and trading volumes.

Robinhood's reliance on active retail traders places its business model at heightened risk in periods of labor market sluggishness and economic restraint.

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How To Buy HOOD Stock

By now you're likely curious about how to participate in the market for Robinhood Markets – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy 'fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.

In the case of Robinhood Markets, which is trading at $40.3 as of publishing time, $100 would buy you 2.48 shares of stock.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to 'go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

According to data from Benzinga Pro, HOOD has a 52-week high of $43.83 and a 52-week low of $10.38.