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Robinhood Initiated With Buy Rating at Redburn Partners

Move comes one day before Robinhood's first report of quarterly financial results since going public last month.

Robinhood  (HOOD) - Get Robinhood Report received a buy rating from an analyst at Redburn Partners Tuesday who initiated coverage one day before the online brokerage is scheduled to report results for the first time since going public in July.

Analyst Charles Bendit, who has and fair value estimate of $65.35, implying 29% upside, said Robinhood "has rapidly become a symbol of retail investing and finance in America."

Shares of the Menlo Park, Calif. company were down 1.6% to $46.44 at last check.

"Robinhood has had a profound impact on the construct of the brokerage market in the US," the analyst said in a research report. "It continues to enlarge its defined market and is geared into the increasing wealth of its users, a generation whose share of US wealth is projected to triple by 2030." 

Robinhood, which went public last month, is expected to report a second-quarter loss of 15 cents a share, on sales of $521.8 million after the close on Wednesday, based on a FactSet consensus.

"Robinhood pioneered no-minimum brokerage accounts and commission-free trading of stocks, ETFs and options," Bendit said. 

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The analyst added that "a highly innovative approach to financial products, together with superior UX for a generation of mobile-first customers, has seen it establish a category-defining brand and one that has made investing socially relevant for the next generation." 

"Robinhood’s early success at the expense of the large incumbent brokers has forced these companies to abandon commissions and replicate key aspects of its offering," Bendit said.

Further, he said, there has been a proliferation in the number of neobrokers, many of which were created in the aftermath of the global financial crisis, "with an abundance of venture funding available to accelerate their development."

The company's model has empowered a new breed of investors, Bendit said, "led to an explosion of trading activity alongside increasing use of margin and options trading."

"For this group, social media exerts a powerful influence, leading to occasional outbreaks in trading activity in certain securities," he said.

Robinhood was founded in April 2013 by Vladimir Tenev and Baiju Bhatt, who had previously built high-frequency trading platforms for financial institutions.

TheStreet's Jim Cramer recently lauded the company for revolutionizing investing for the retail investor and has become increasingly positive on the stock.