What happened
Shares of financial technology company Dave (DAVE 2.82%) plunged 65.2% lower in February 2022, according to data from S&P Global Market Intelligence. Having launched through a special-purpose acquisition company (SPAC) on January 5, the stock is now down 51.5% from the first day's closing price.
So what
So far, the company offers an overdraft protection service, a simple budgeting tool, a credit-building system for reporting bill payments to credit bureaus, and a search tool for freelance-style side gigs. All of these financial tools are managed via a smartphone app. Backed by Shark Tank billionaire and media profile Mark Cuban, Dave entered the market with high expectations, and the stock managed to climb a bit in January.
However, Dave ran out of steam as the stock market generally backed away from risky growth stocks trading at nosebleed valuations. Dave punched a ticket on this downward ride thanks to a limited operating history, deeply negative bottom-line results, and an unclear path to future profits. Moreover, the company has not yet reported earnings as a public company, making the financial picture even murkier.
Image source: Getty Images.
Now what
In times of uncertain market conditions, high-flying stocks are often brought down to lower price levels. Dave's business goals may be noble, but investors are not convinced that the company will make any money in the long run. That might change over time as Dave develops additional fintech tools and services with more obvious moneymaking attributes. Until then, Dave is a highly speculative investment with lots of questions left unanswered. The worst of this young stock's post-launch volatility is probably over and done with, but early investors still need to buckle up for a rocky ride.
