The fintech industry, which merges traditional finance with cutting-edge technology, is reshaping our world, making digital solutions a part of our modern lives. Projected to hit $792.5 billion by 2032 and expanding at a 12.3% CAGR, the fintech market is set for substantial growth. As demand for innovative financial services surges, investments in artificial intelligence (AI), blockchain, and cybersecurity are driving this revolution, offering lucrative opportunities and addressing the gaps left by the legacy finance system.
While giants like PayPal (PYPL), Visa (V), and Block (SQ) are some of the most recognizable names in the niche, small-cap innovators like Dave Inc. (DAVE) are making their mark with their fresh take on banking. The stock has delivered a breakout performance this year, and DAVE just beat Wall Street’s estimates on Q2 earnings on the way to achieve expected profitability in 2025 - with analysts projecting plenty more upside in store for the shares between now and then.
Here’s a closer look at this standout small-cap stock.
About Dave Stock
Founded in 2015, Los Angeles-based Dave Inc. (DAVE) is a leading U.S. neobank and fintech trailblazer, serving millions of Americans. By leveraging disruptive innovations, Dave offers best-in-class banking services at a fraction of the cost of traditional banks, revolutionizing the financial landscape.
Dave went public in early 2022 through a SPAC merger that valued the company at $4 billion. But like many SPACs launched at the time, DAVE struggled early, and is now valued at $493 million by market cap - qualifying it for membership in the Russell 2000 Index (RUT).
As of 2024, the outlook is much better for DAVE. Shares of the fintech stock have skyrocketed 453.5% over the past 52 weeks and 375.6% on a YTD basis, crushing the broader S&P 500 Index’s ($SPX) returns over both time frames.
Dave's Q2 Earnings Crush Forecasts
On Aug. 5, Dave topped Q2 earnings expectations, reporting $80.1 million in revenue and an adjusted net income of $13.7 million, or $1.01 per share. While the top line grew nearly 31% annually, beating projections by 5.9%, the fintech firm flipped the year-ago quarter’s $1.33 per share loss into a solid profit, which also exceeded consensus estimates.
The Q2 revenue surge marked Dave’s third consecutive quarter of accelerating growth, driven by an 11% boost in average revenue per user (ARPU) and an 18% jump in monthly transacting members, hitting a record 2.3 million. As of June 30, Dave has secured a membership base of 11.3 million users. Plus, Dave’s extra cash product originations rose 37%, and Dave Card spending volume grew 28%, highlighting the firm’s momentum.
Management’s strategy for efficient customer acquisition, powered by CashAI and a leaner fixed expense base, led to a 15% sequential uptick in adjusted EBITDA, highlighting the business model’s strong operating leverage.
Riding high on these impressive results, Dave raised its revenue and EBITDA forecasts for the year. It is now aiming for revenue between $310 and $325 million, with an adjusted EBITDA between $40 and $50 million. Going forward, management’s focus is on enhancing customer value, growing its member base, and leveraging tech for even greater operational efficiency.
Analysts tracking Dave project the company to reduce its GAAP loss by 95.6% year over year in fiscal 2024 and swing to a profit of $1.77 per share in fiscal 2025.
What’s the Price Target for DAVE Stock?
On Aug. 12, Benchmark initiated coverage on DAVE with a "Buy" rating and a $53 price target. Benchmark’s valuation hinges on a 13x EV/EBITDA multiple for Dave’s forecasted fiscal 2025 adjusted EBITDA of $57.8 million.
Benchmark’s optimism centers on Dave’s ExtraCash cash advance product, designed to help 65% of U.S. consumers living paycheck to paycheck by offering short-term liquidity. With a total addressable market of 180 million consumers, Benchmark highlights Dave’s significant growth potential, noting that the company currently taps into just 7% of this market.
DAVE stock is a unanimous "Strong Buy" on Wall Street, with all six analysts in coverage giving the shares their highest rating.
The average analyst price target of $61.17 indicates a potential upside of 53.4% from the current price levels. The Street-high price target of $75 suggests that the stock could rally as much as 88% from here.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
