Half a year ago, special purpose acquisition company (SPAC) VPC Impact Acquisition Holdings III announced that it would merge with Los Angeles-based banking app Dave (DAVE 15.60%) in order to take the company public. On Jan. 6, 2022, Dave stock finally started trading on the Nasdaq.
The SPAC's co-CEO Brendan Carroll excitedly claimed that Dave built a banking solution with "differentiated offerings that will continue to improve their customers' financial lives." For experienced fintech investors, though -- or for anyone who's ever tried out MoneyLion or the even-more-similar competitor SoFi Technologies (SOFI 4.55%) -- this kind of language might sound familiar.
Sure, Dave has reportedly received backing from Shark Tank star and Dallas Mavericks owner Mark Cuban, but by itself, that shouldn't convince anyone to jump in. Hence, the two-part question lingers: What actually sets Dave apart, and is the company financially viable?
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Dave vs. Goliath
In the company's June 2021 investor presentation, Dave attempts to position itself as the hero, waging war against legacy banks and their nefarious overdraft fees. Dave also identifies a target addressable market of high-need and just-getting-by clients -- i.e., the unbanked and underbanked.
For Dave, serving this clientele means no overdraft fees, no minimum-balance fees, and no ATM fees at 37,000 MoneyPass ATMs, according to MoneyPass itself. Micro loans are also available through the ExtraCash feature, which provides cash advances of up to $200 "without the fees." Besides all of that, Dave can help users join the gig economy through its Side Hustle feature. "I'll hook you up with local, flexible jobs that fit with your busy schedule," Dave assures.
Dave's services might sound familiar, but familiarity can breed contempt in the competitive field of personal finance apps. For an upstart with apparently lofty ambitions of taking on larger players, Dave provides some of the features that savers crave, but perhaps doesn't yet convey that "wow" factor that a true disruptor needs.
Déjà vu
If some of Dave's features sound familiar to you, it might be because, to a certain extent, SoFi has already blazed the trail that Dave is traveling.
For example, the SoFi Money app charges no account fees and no ATM fees at more than 55,000 ATMs worldwide, apparently beating Dave's fee-free ATM network coverage. Furthermore, while Dave will help you with your side hustle, SoFi provides access to free one-on-one career services, including help with career transitions and job searches. And while Dave offers micro-loans of up to $200, SoFi provides personal loans of $5,000 to $100,000 with fixed rates as low as 5.74% APR (including all discounts).
Along with those features, both apps provide the usual litany of fintech-app benefits: bill auto-pay, fast transfers, security features, and so on. The point here isn't to turn this into a head-to-head app review, but to show that while Dave might be nice to its customers, it's neither unique nor superior.
Status unknown
Unfortunately, Dave's bottom-line financial stats are elusive. Thus far, the only extant 10-Q forms pertain to VPC. The SPAC incurred a $2.7 million net loss during 2021's third quarter, and a net loss of $7.8 million when the time frame is extended back to its inception date of Jan. 14, 2021, but these stats don't necessarily reflect Dave's results.
SoFi's financial profile, while more easily researched, leaves much to be desired. In 2020's first nine months, the company sustained a net loss of $141.4 million; in the same period of 2021, the net loss more than doubled to $373 million.
And for what it's worth, Dave expects its revenue to grow 95.2% this year and 41.4% next year, compared to 53.1% in 2022 and 40.4% in 2023 for SoFi -- but then, long-term future estimates aren't necessarily worth betting one's hard-earned money on.
Unfortunately, there's not yet a concrete date of when we'll have more financial information (quarterly/annual results and other relevant press releases) directly from Dave. Going forward, transparency will be crucial to Dave's credibility -- as will revenue growth, for which Dave has established double-digit expectations for this and next year.
Save Dave for another day
Dave certainly is friendly, and Cuban's backing ought to be worth something. Still, in the growing field of fintech apps, a disruptive spirit and a drive to serve the underserved might not be enough.
Don't misunderstand -- Dave's ExtraCash feature will undoubtedly help struggling savers get through tough times, and that's commendable. Yet, on the whole, Dave's features aren't noticeably different or better than SoFi's.
Moreover, more time and data are needed to properly compare Dave's financials to SoFi's (which, admittedly, are less than ideal). So, while Dave might indeed be a good friend to its clients when a little extra cash is needed, investors should adopt a wait-and-see stance for the time being.
