Since the close of trading last week, shares of the neobank Dave (DAVE 2.18%) traded roughly 7.2% higher, as of 12:46 p.m. ET Friday. Shares had risen as much as 11% on Thursday amid a packed week for the company, during which it reported earnings and announced a convertible debt raise.
Nearly a full round trip
Since going public through a special purpose acquisition company (SPAC) at the very start of 2022, Dave has seen its shares crushed, only to have made a strong comeback that began in 2024. The stock is still down 33% since its original SPAC days, but investors who bought in mid-2022 or 2023 have made incredible gains.
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The company, which primarily issues small-dollar, short-term loans of $500 or less, typically repaid within a few weeks, reported fourth-quarter and full-year earnings on Monday.
In 2025, Dave grew revenue 60%, net income by 238%, and adjusted EBITDA by 162% year over year. In 2026, Dave is guiding to $700 million in operating revenue at the midpoint of guidance, which implies about 26.5% growth. The company is also guiding for about 10% growth in adjusted diluted earnings per share in 2026.
NASDAQ: DAVE
Key Data Points
On Dave's earnings call, management also said it believes the 2026 revenue growth projections are sustainable over the next few years, with an opportunity to outperform.
Finally, Dave also announced this week that it plans to raise $150 million through convertible senior notes due in 2031. Part of the proceeds will be used to buy back stock.
Much improvement, but some cyclical risks
Previously, I was not a big fan of Dave's model, which relied on voluntary tips from customers, who used its much cheaper alternative to traditional bank overdrafts.
However, this new ExtraCash product is much more interesting. The company examines real-time customer cash flow data to underwrite and can likely adjust criteria much more quickly because of the extremely short-term nature of its loans. Loss rates are quite low for this product category.
Trading at about 14 times forward earnings, the valuation is quite reasonable if the company can generate the growth it claims. But the business is likely somewhat cyclical, as its customer base could struggle in a recession. I think customers can buy the stock, but should start by nibbling and monitoring progress for a few quarters before taking a larger position.
