TipRanks Smart Growth Portfolio #2: Checks and Balances
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Dear Investors,
Welcome to the 2nd edition of our newly minted Smart Growth Portfolio and Newsletter.
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Portfolio News and Updates
❖ Needham initiated coverage of Backblaze (BLZE) with a “Buy” rating and $8 price target. The firm believes that the company’s recent changes should lead to improved productivity and higher win rates exiting 2024. Needham also said that early signs of success should position Backblaze B2 for reaccelerating growth of over 30% by the end of 2025.
❖ Cathie Wood’s ARK Investment continues to capitalize on the pullback in growth stocks. Wood has shown renewed confidence in GitLab (GTLB), with the ARKK and ARK Next Generation Internet ETFs purchasing nearly $5.37 million worth of the company’s stock.
❖ Alkami (ALKT) announced its intention to offer, subject to market and other conditions, $300 million in aggregate principal amount of convertible senior notes due 2030 in a private offering to institutional investors believed to be qualified buyers.
In other company news, Stephens upgraded ALKT to “Buy” from “Hold,” assigning a $40 price target. The firm believes the recent decline in shares has created “a favorable entry point.” Stephens also cited the company’s acquisition of MANTL, which it expects to enhance platform scalability, as well as Alkami’s strong revenue visibility and favorable core business positioning.
❖ Clear Secure (YOU) continues to expand locations outside the airport environment to enroll and renew consumers in the Trusted Traveler program by opening new locations in shopping malls in Florida, Texas, and Georgia. This marks Clear’s first non-airport locations in these areas for TSA PreCheck enrollment and renewal services, complementing its 56 airport-based enrollment and renewal locations across the U.S.
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This Week’s Top Growth Pick: Dave Inc. (DAVE)
Dave Inc. (aka Dave.com) is a fintech company offering digital banking solutions designed to improve financial stability and accessibility. Its platform provides cash advances, fee-free banking, and automated budgeting tools, helping users manage expenses and avoid overdraft fees. By leveraging AI-driven insights and a seamless mobile experience, Dave empowers consumers with personalized financial management and credit-building opportunities. The company’s Side Hustle marketplace connects users with gig economy jobs, expanding income potential. Focused on financial inclusion, Dave eliminates traditional banking barriers and enhances liquidity for millions. Its innovative approach to everyday banking positions it as a leader in the evolving neobank sector, delivering convenient, transparent, and user-friendly financial services.
Source: Dave, Inc. company website
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Overdraft to Overhaul
Founded in 2017, Dave Inc. emerged as a fintech innovator aiming to make banking fairer for people living paycheck to paycheck. The company’s mission centers on helping users avoid overdraft fees and manage their finances more effectively.
In its early years, Dave gained significant attention and investment, notably from entrepreneur Mark Cuban, who led a $3 million seed round. That backing helped launch its first budgeting tools and cash advances. Over time, it attracted major investors like Norwest Venture Partners, Section 32, and Capital One, fueling further growth.
In 2019, Dave expanded into digital banking through a partnership with Evolve Bank & Trust, adding no-fee checking accounts and its signature ExtraCash advance. It went public via SPAC on January 5, 2022, listing on the Nasdaq under “DAVE.” The deal provided capital to scale operations and enhance its fintech infrastructure.
In 2024, Dave faced regulatory scrutiny when the Federal Trade Commission accused it of misleading customers about the optionality and allocation of tips it prompted users to give when applying for a cash advance. To address these concerns, Dave eliminated tips and undisclosed fees for all new customers starting December 4, 2024, and committed to phasing out these practices for existing users.
Throughout its corporate journey, Dave has formed strategic partnerships to enhance its services, integrating advanced payment solutions through Mastercard and improving financial education via a collaboration with Credit Karma.
Today, Dave continues to evolve and innovate, expanding its customer base and refining its financial products to promote stability and accessibility. By tackling barriers in traditional banking, it remains a major player in the fintech space.
Source: Dave, Inc. Q4 2024 Earnings Presentation
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Feevolution: A New Model
Dave operates as a neobank, focusing on helping users avoid overdraft fees, build credit, and access short-term liquidity. Its business model combines subscription-based services, transaction-driven revenue, and cash advances, all structured to offer financial flexibility without the hidden costs of traditional banking.
The company’s flagship ExtraCash feature provides interest-free cash advances of up to $500, helping users cover short-term expenses before their next paycheck. Alongside this, Dave’s digital banking platform offers no overdraft fees, no minimum balance requirements, and paycheck advances, making it a viable alternative to traditional banks.
Source: Dave, Inc. Q4 2024 Earnings Presentation
Beyond lending and basic banking, Dave provides various financial tools, including programs to help users improve their credit scores, automated budgeting and expense tracking, and more. The Side Hustle Marketplace, which connects users with gig economy opportunities, fits naturally into Dave’s ecosystem by offering additional income sources to its users.
One of the company’s key revenue streams comes from its $1 monthly membership fee, which grants access to budgeting tools and account monitoring. This subscription model ensures steady revenue while helping users track their finances and avoid unnecessary fees.
Since its 2024 overhaul, Dave has transitioned to a transparent fee model, further strengthening trust and compliance while enhancing the user experience. Instead of the previous tipping and express fee structure, users now pay a flat 5% fee on cash advances, with a minimum charge of $5 and a cap at $15.
Dave also generates transaction-based revenue through its debit card services. Every time a user makes a purchase with a Dave card, the company earns a percentage of the transaction amount through interchange fees. This aligns with the broader neobank industry, where monetization depends on user engagement and spending habits rather than traditional banking fees.
Another revenue stream comes from the Side Hustle feature, which helps users find gig work and supplemental income opportunities. By partnering with third-party companies, Dave earns referral fees each time a user secures a job through the platform. This initiative not only generates revenue but also reinforces Dave’s mission of improving financial stability by connecting users with new earning opportunities.
Source: Dave, Inc. Q4 2024 Earnings Presentation
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Fintech Forward
Dave Inc. has demonstrated strong financial momentum, with revenue growing steadily over the past three years. In 2024, the company reported $347.1 million in annual revenue, a 34% year-over-year increase, following $259 million in 2023 and $205 million in 2022. This reflects a CAGR of approximately 31% over the past three years. Fourth-quarter revenue reached $100.9 million, marking a 38% year-over-year increase, driven by higher user engagement and increased transaction volumes.
Source: Dave, Inc. Q4 2024 Earnings Presentation
Profitability metrics have also improved significantly. Dave posted $16.8 million in net income for Q4 2024, a sharp increase from just $0.2 million a year earlier. On a full-year basis, the company swung from a net loss in 2023 to positive GAAP net income in 2024, reflecting its ability to scale profitably. Adjusted EBITDA surged 234% year-over-year, reaching $33.4 million in Q4, well above the high end of guidance. This underscores stronger operating leverage and cost efficiencies as Dave continues to grow.
The company’s cash position remains solid, providing ample financial flexibility. As of December 31, 2024, Dave held $314.6 million in cash and cash equivalents, ensuring a substantial runway to support expansion and navigate potential market shifts. With no urgent liquidity concerns, Dave has the capacity to reinvest in growth while maintaining financial stability.
Looking ahead, Dave expects to sustain its revenue expansion and further improve profitability in 2025. Management has expressed confidence in continued adjusted EBITDA growth as the company benefits from its streamlined fee structure, increased transaction volume, and ongoing user engagement. Dave’s 2025 guidance – which, like in 2024, may be revised upward and ultimately exceeded – projects annual revenue growth of 20-25% and EBITDA expansion of 27-39% from 2024.
The company’s clear path toward sustained profitability and its strong cash reserves position it as a stable force in the evolving neobank industry. With a combination of accelerating revenue, improving margins, and a strengthened balance sheet, Dave is signaling a robust business model that balances growth with profitability.
Source: Dave, Inc. Q4 2024 Earnings Presentation
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Growth at a Discount
Dave’s stock has returned over 140% in the past 12 months, with most of the gains occurring after the company’s stellar Q3 2024 results, released in November 2024, which drew wide investor attention. From November 5th – when Dave announced preliminary earnings data – through its latest peak on February 14th, the stock soared more than 200%, propelled by growing institutional exposure and increased retail interest. However, broader market conditions have weakened, weighing on high-growth stocks, and Dave has since given up part of these gains.
The recent declines have made DAVE’s valuation increasingly attractive, with its P/S ratio of 3.10 now sitting below the average for fintech peers – and far cheaper than firms like Upstart, Affirm, and SoFi. Even after the correction, some high-flying fintech stocks continue to trade at premium valuations despite ongoing losses. Meanwhile, Dave is one of the few profitable fintechs in the group, giving it a distinct competitive position. Moreover, its revenue growth over the past year has outpaced all of its peers except Affirm, creating a rare “value” opportunity in the traditionally growth-focused fintech sector.
The potential for Dave’s stock price appreciation in the near term is supported by the company’s new share repurchase authorization, announced on March 10th. The program authorizes the company to repurchase up to $50 million of its stock and has no expiration date.
Given this setup, it’s no surprise that Wall Street sentiment remains strongly bullish. According to TipRanks’ top-rated analysts, DAVE is a “Strong Buy,” with an average 12-month price target implying nearly 57% upside. Notably, four out of seven analysts covering the stock have raised their price targets in the past month, reinforcing confidence in its continued momentum.
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To Sum It All Up
Dave Inc. is a fintech company focused on making banking more accessible and improving financial stability for its users. Since going public, Dave has rapidly expanded, forming key partnerships with Mastercard and Credit Karma while refining its business model. In recent years, the company transitioned to a transparent fee structure and reached profitability, reinforcing its competitive edge. Despite stock outperformance, Dave remains attractively valued compared to its peers, with analysts expressing strong confidence in its future. With a solid financial position, growing institutional interest, and a commitment to innovation, the company is well-positioned for continued expansion in the evolving neobank industry.
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Smart Growth Portfolio
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Click here for more stock analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
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