Robinhood Markets Inc (NASDAQ:HOOD) slipped 0.6% in Wednesday's after-hours session following a volatile trading day. The decline came as new employment data pointed to a cooling U.S. labor market, sparking concerns about a potential drop in retail trading activity and waning investor engagement on the platform.

What To Know: The ADP National Employment Report showed private employers added just 122,000 jobs in December, missing expectations and highlighting a slowdown in key sectors like manufacturing and trade.

Robinhood's business model relies heavily on retail trading volumes, which are sensitive to economic conditions affecting individual investors.

A weakening labor market, coupled with slowing wage growth, reduces disposable income and dampens investor confidence — key drivers of trading activity on the platform. This can lead to lower revenue from payment for order flow, which represents a substantial portion of Robinhood's income.

Additionally, decelerating wage gains could limit the influx of new retail investors, particularly younger users who form a significant portion of Robinhood's customer base. With fewer opportunities for speculative trading and reduced enthusiasm for high-risk assets, the platform may face declining engagement.

The broader economic uncertainty, including elevated Treasury yields and Federal Reserve tightening, compounds these risks, potentially eroding Robinhood's revenue streams tied to options and cryptocurrency trading, two of its most lucrative segments.

How To Buy Robinhood Stock

Besides going to a brokerage platform to purchase a share — or fractional share — of stock, you can also gain access to shares either by buying an exchange-traded fund (ETF) that holds the stock itself or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in Robinhood Markets' case, it is in the Financials sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

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