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Dave Stock Soars 142% in 6 Months: Should You Buy It Right Now?
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Dave Inc. (DAVE - Free Report) stock has shown outstanding growth over the past six months. The stock has skyrocketed 142.4%, outperforming the 50.3% rally of the industry and 11.5% growth of the Zacks S&P 500 composite.
DAVE’s performance is significantly higher than that of its competitors, Encore Capital Group, Inc. (ECPG - Free Report) and NerdWallet, Inc. (NRDS - Free Report) . ECPG has gained 19.6%, and there has been a marginal rise in NRDS over the past six months.
Six Months' Price Performance
Image Source: Zacks Investment Research
As of the last trading session, the stock closed at $85.9, 20.6% down from the 52-week high of $103.7. DAVE is trading above its 50-day moving average, indicating a bullish sentiment among investors.
Stock Trades Above 50-SMA
Image Source: Zacks Investment Research
Investors might be compelled to buy the DAVE stock, looking at its growth trajectory over the past six months. However, the question of whether now is the right moment to buy the stock needs to be answered. Let us find out.
Dave’s Business Model Seems to be a Game Changer
Cash advance of $50-$250 is Dave’s core product. This product is used by U.S. customers to avoid overdraft fees and to be utilized in daily life. The business is useful for consumers who turn to expensive check cashing or payday loans. The versatility of this product comes to the limelight when consumers realize that there are three methods of borrowing from Dave. The first method is instant on the Dave card, which is a 3% fee, plus Dave earns interchange on the transactions that average 2%. The second method is direct to the bank account via Visa Direct, which is a 5% fee. The final method is through Automated Clearing House transfer to a bank account, which is free.
Apart from the initial transfer fee for swift transactions, the company does not charge any interest on its cash advances, which is appealing to customers. DAVE also earns money on tips and subscriptions. The cash advances made to customers are repaid from consumers’ bank accounts as soon as their paycheck gets credited. This is why the credit losses are at a minimal 1.3% of the origination. Dave’s method to increase the limit of cash advances from $25 to $500 after a customer has paid off a few times is attractive.
The company has incorporated AI in its business model — in credit models, and to identify who qualifies for a cash advance and how much they should receive. Also, this technology assists the company in its call centers by resolving 90% of tickets without involving any agent. This is why the company can offer top-notch services to its customers at a lower price than its competitors.
DAVE leverages a fully automated machine learning algorithm rather than the FICO-based models used by traditional banks to analyze historical spending, savings and earnings before making cash advances to its members. This results in efficient disbursements without any setbacks to the credit quality.
DAVE’s Growing Membership Base Looks Promising
In the third quarter of 2024, Dave’s new members increased 4% to 854,000 from the year-ago quarter. The metric increased 19.2% from the preceding quarter. Despite the rise in new customers, acquisition costs decreased 14% year over year to $15 in the third quarter of 2024 and remained flat from the preceding quarter. This suggests that the company might be able to remain on the path to sustainable growth.
DAVE has continued to prioritize effective member acquisition at a rising scale, driving consistent growth in its monthly transacting member base in a cost-efficient manner. It can further strengthen the company’s market position.
Dave Stock Appears Inexpensive
The DAVE stock looks cheap at present and appealing to investors. It is priced at 21.2 times forward 12-month earnings per share, which is lower than the industry’s average of 41.2 times.
Image Source: Zacks Investment Research
DAVE’s Robust Capital Returns
Return on equity (ROE), a measure of profitability, reflects how effectively a company uses its shareholders' investments to generate earnings. DAVE’s trailing 12-month ROE is 33.7% compared with the industry’s average of 3.4%.
Image Source: Zacks Investment Research
Dave’s Liquidity Beats Industry
The company has a strong liquidity position, with a current ratio of 6.81 at the end of the third quarter of 2024, higher than the industry’s 2.16. A current ratio above 1 suggests that the company can easily pay off its short-term obligations.
Image Source: Zacks Investment Research
DAVE’s Strong Top & Bottom-Line Outlook
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $341.3 billion, hinting at 31.7% growth from the year-ago reported level. For 2025, the top line is anticipated to increase 21.5% year over year.
The consensus estimate for earnings in 2024 is pegged at $3.3 per share, whereas it incurred a loss of $4.1 a year ago. For 2025, the bottom line is expected to rise 31.1% on a year-over-year basis.
Now is the Right Time to Buy DAVE
Dave utilizes its business model to acquire more customers and lower customer acquisition costs. The company has incorporated AI into its business, which enables it to provide its services to consumers efficiently. The stock looks inexpensive, provides returns on capital greater than the industry and has a robust liquidity position. Its strong top and bottom-line prospects look encouraging.
We recommend investors buy the stock now on the back of the aforementioned positive factors to enjoy the benefits of a greater capital return in the long run.
Image: Bigstock
Dave Stock Soars 142% in 6 Months: Should You Buy It Right Now?
Dave Inc. (DAVE - Free Report) stock has shown outstanding growth over the past six months. The stock has skyrocketed 142.4%, outperforming the 50.3% rally of the industry and 11.5% growth of the Zacks S&P 500 composite.
DAVE’s performance is significantly higher than that of its competitors, Encore Capital Group, Inc. (ECPG - Free Report) and NerdWallet, Inc. (NRDS - Free Report) . ECPG has gained 19.6%, and there has been a marginal rise in NRDS over the past six months.
Six Months' Price Performance
As of the last trading session, the stock closed at $85.9, 20.6% down from the 52-week high of $103.7. DAVE is trading above its 50-day moving average, indicating a bullish sentiment among investors.
Stock Trades Above 50-SMA
Investors might be compelled to buy the DAVE stock, looking at its growth trajectory over the past six months. However, the question of whether now is the right moment to buy the stock needs to be answered. Let us find out.
Dave’s Business Model Seems to be a Game Changer
Cash advance of $50-$250 is Dave’s core product. This product is used by U.S. customers to avoid overdraft fees and to be utilized in daily life. The business is useful for consumers who turn to expensive check cashing or payday loans. The versatility of this product comes to the limelight when consumers realize that there are three methods of borrowing from Dave. The first method is instant on the Dave card, which is a 3% fee, plus Dave earns interchange on the transactions that average 2%. The second method is direct to the bank account via Visa Direct, which is a 5% fee. The final method is through Automated Clearing House transfer to a bank account, which is free.
Apart from the initial transfer fee for swift transactions, the company does not charge any interest on its cash advances, which is appealing to customers. DAVE also earns money on tips and subscriptions. The cash advances made to customers are repaid from consumers’ bank accounts as soon as their paycheck gets credited. This is why the credit losses are at a minimal 1.3% of the origination. Dave’s method to increase the limit of cash advances from $25 to $500 after a customer has paid off a few times is attractive.
The company has incorporated AI in its business model — in credit models, and to identify who qualifies for a cash advance and how much they should receive. Also, this technology assists the company in its call centers by resolving 90% of tickets without involving any agent. This is why the company can offer top-notch services to its customers at a lower price than its competitors.
DAVE leverages a fully automated machine learning algorithm rather than the FICO-based models used by traditional banks to analyze historical spending, savings and earnings before making cash advances to its members. This results in efficient disbursements without any setbacks to the credit quality.
DAVE’s Growing Membership Base Looks Promising
In the third quarter of 2024, Dave’s new members increased 4% to 854,000 from the year-ago quarter. The metric increased 19.2% from the preceding quarter. Despite the rise in new customers, acquisition costs decreased 14% year over year to $15 in the third quarter of 2024 and remained flat from the preceding quarter. This suggests that the company might be able to remain on the path to sustainable growth.
DAVE has continued to prioritize effective member acquisition at a rising scale, driving consistent growth in its monthly transacting member base in a cost-efficient manner. It can further strengthen the company’s market position.
Dave Stock Appears Inexpensive
The DAVE stock looks cheap at present and appealing to investors. It is priced at 21.2 times forward 12-month earnings per share, which is lower than the industry’s average of 41.2 times.
DAVE’s Robust Capital Returns
Return on equity (ROE), a measure of profitability, reflects how effectively a company uses its shareholders' investments to generate earnings. DAVE’s trailing 12-month ROE is 33.7% compared with the industry’s average of 3.4%.
Dave’s Liquidity Beats Industry
The company has a strong liquidity position, with a current ratio of 6.81 at the end of the third quarter of 2024, higher than the industry’s 2.16. A current ratio above 1 suggests that the company can easily pay off its short-term obligations.
DAVE’s Strong Top & Bottom-Line Outlook
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $341.3 billion, hinting at 31.7% growth from the year-ago reported level. For 2025, the top line is anticipated to increase 21.5% year over year.
The consensus estimate for earnings in 2024 is pegged at $3.3 per share, whereas it incurred a loss of $4.1 a year ago. For 2025, the bottom line is expected to rise 31.1% on a year-over-year basis.
Now is the Right Time to Buy DAVE
Dave utilizes its business model to acquire more customers and lower customer acquisition costs. The company has incorporated AI into its business, which enables it to provide its services to consumers efficiently. The stock looks inexpensive, provides returns on capital greater than the industry and has a robust liquidity position. Its strong top and bottom-line prospects look encouraging.
We recommend investors buy the stock now on the back of the aforementioned positive factors to enjoy the benefits of a greater capital return in the long run.
DAVE sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.