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Dave Inc (DAVE) Writeup
Dave is a fintech company that was started in 2016 by Jason Wilk. The company launched the Dave App in 2017. The company raised venture money in 2018-2021. The company came public in late 2021 through a merger with a SPAC, VPC Impact Acquisition Holdings III, that valued Dave at $4bn. Despite having a healthy ~10-20% profit margin for most of its life as a private company, after going public, Dave ramped up marketing and customer acquisition spending, which drove large losses in 2022 and 2023, masking the strong unit economics of the business. The management began pulling its profitability levers in 2023, and the results are beginning to show up now. There is significant upside to earnings estimates as the company continues to drive profitable growth. In particular, management is testing a new subscription pricing of $4/user/month for all customers who use Dave’s core cash advance product. By my estimates, this change alone will drive the company’s EPS to over $10/share in 2025 or 2026 versus consensus EPS of $2.10 in 2025. I estimate the stock is worth over $100/share in the next 12-18 months as the market realizes Dave’s earnings power and business value.
How the business works
Dave’s core product is a cash advance of $25 to $500, which is used by US consumers to help avoid overdraft fees and make ends meet. The business serves underserved consumers who often turn to costly check cashing or payday loans. There are three methods that consumers can borrow from Dave (1) instant on Dave card which is a 3% fee, plus Dave earns interchange on the transactions which averages about 2% (2) direct to bank account with Visa direct which is a 5% fee and (3) ACH transfer to bank account which is free. Dave does not charge interest on its cash advances – only the initial transfer fee for faster speed, similar to Venmo and CashApp’s revenue model of charging for fast delivery. Dave has 2.2m monthly active members that each average three transactions per quarter for a total of 6.6m transactions per quarter. The average origination size is $159 and the average revenue per transaction is $9, a 5.7% take rate. In addition, Dave earns money on tips and subscriptions. The cash advances are automatically repaid from the consumer’s bank account as soon as their paycheck hits the account. Dave’s credit losses are about 1.3% of originations because of the way they extend the extra cash products. Dave starts with a $25 advance. If that amount is repaid a few times, they will gradually increase it over time, up to a max of $500. The average duration is only 14 days, so the velocity of the advances is very high, allowing Dave to adjust its credit model in real-time.
Dave competes with companies like Chime, MoneyLion, and Brigit. Chime is expected to IPO in 2025 which will drive a further understanding of the cash advance business and an additional comparable company. Chime last raised capital in 2021 at a $25bn valuation.
Dave is an early adopter of artificial intelligence, using it both in its credit models to determine which consumers get cash advance offers and for how much and also in its call centers, resolving 90% of tickets without touching an agent. These results allow Dave to offer better customer service and a lower price point than competitors.
The path to $10+ EPS
Up until the last few months, Dave had no sell side analysts and investors did not understand Dave’s business model and potential. Even today, I estimate that the business has $10+ of EPS power in 2025 or 2026 versus the street modeling $2.10 of EPS in 2025. In addition to continued 20% revenue growth in the core business.
As discussed on the last earnings call, Dave implemented a new billing system and is testing new subscription pricing. I estimate that Dave could implement $3-5/month pricing for all of its monthly users. At that price point, it is still a meaningful discount to competitors such as Brigit which charge over $10/month in subscription fees.
I estimate incremental 50% EBITDA margin on core business growth, which is lower than the 150% incremental margin DAVE has driven over the last five quarters. The flow through of incremental revenue has been over 100% because Dave has reduced the level of spending on marketing and opex.
In addition, I estimate that Dave will generate $4/month on its 2.2m monthly active users, driving an incremental $106m of revenue at 90% margin. This drives 2025 EBITDA potential to $161m versus the street at $51m (the street is not modeling subscription pricing change).
From there, removing capex and capitalized software development cost, economic cost of dilution, and interest expense results in $137m of adjusted net income. Divided by 13.5m diluted share count gets $10.15/share of adjusted EPS (economic earnings). The company will not pay taxes for many years, given the large balance of NOLs. Note that stock-based compensation in the GAAP financials is based on stock awards that were granted at the time of the IPO at $320/share. I calculate economic dilution by looking at the market cap x % annual dilution from here which works out $400m x 2.5% = $10m/yr.
Valuation
I estimate that Dave is worth over $100/share based on 10x P/E. Dave currently trades at 14.2x 2025 P/E. Applying the same earnings multiple to my estimate of 2025 EPS arrives at a value of $144/share.
At $100, Dave would be valued at about $1.4bn which is meaningfully higher than its current valuation, but still significantly below the $4bn valuation that venture capitalists invested in 2021 and the IPO valuation at the same $4bn, despite Dave significantly growing revenue and inflecting the business to software-like margins >30%.
Looking at value through a different lens, consumer credit companies spend hundreds of dollars per user to acquire new users. Dave has 10.8m lifetime signups and 2.2m monthly active users. At $150 per lifetime customer signup, Dave is worth $1.6bn or $120/share. A strategic acquirer like Capital One or Citi might be interested in acquiring Dave and using Dave’s data on actual repayment history to make credit card offers to highly engaged consumers. Credit card products are much more lucrative than cash advance. Over time, if Dave is not acquired, the company may launch its own credit card or credit builder product.
Risks
• Dave may not realize the earnings power that I expect because they might not change the subscription pricing. Or consumers may use Dave less frequently if there is a pricing change.
• Dave faces credit risk. While credit metrics have meaningfully improved over the last several quarters, a weaker consumer could result in higher delinquencies and higher credit losses.
• Potential regulatory change. While Dave has never had any regulatory issues, the CFPB or other regulators could further regulate the cash advance industry which would impact the entire industry, including Dave.
$ICTY the steady climb continues
Exciting news! 🎉 ICTY is set to announce a bold new direction, leveraging targeted expertise to drive innovation and growth. Stay tuned for updates! 🚀 #ICTY #Innovation #Growth
— Eyecity.com, inc (@EyeCitydotcom) June 20, 2024
$BJDX: Reverse Split play. Trading 180% below cash. Microfloater getting targeted by crowd right now. Easy meme play ripper.
$EWRC Great Looking 00 Play on a Steady Uptrend! Nice bullish close above the 200dma today... News on the way next week per the company!
Exciting news is coming next week for our $EWRC shareholders. We'll provide details on the upcoming release of our game on the Epic Games store, Last Seen; Last Night, with an anticipated target date of 7/7.
— eWorld Companies, Inc (@eworld_company) June 26, 2024
VERU......BIOL...................................https://stockcharts.com/h-sc/ui?s=BIOL&p=D&yr=0&mn=3&dy=0&id=p11960084343
https://stockcharts.com/h-sc/ui?s=VERUx&p=D&yr=0&mn=3&dy=0&id=p11960084343
thank you peter
Enjoy Friday Bro
$EWRC News Next Week!
Exciting news is coming next week for our $EWRC shareholders. We'll provide details on the upcoming release of our game on the Epic Games store, Last Seen; Last Night, with an anticipated target date of 7/7.
— eWorld Companies, Inc (@eworld_company) June 26, 2024
hi peter nice to chat, miss our chats.
we are little older now.
holding 39
All good and enjoy life
$BANT 20M OS, trading $0.003, DepartmentOfDefense contracts, acquisition and more: https://finance.yahoo.com/quote/BANT/
Nice to see serious talent joining our party on $PSRU
BMXI
$BMXI Nils Ollquist, CEO of Brookmount Gold has purchased 3,343,210 shares of BMXI at an average price of $.125 / share (a Form 4 has been filed under Rule 144). This over-the-market purchase is from two founding shareholders that needed liquidity, is a signal of strength and…
— Brookmount Gold (@brookmountgold) June 21, 2024
ASTS.....................MULN...............................GOEV..............................https://stockcharts.com/h-sc/ui?s=ASTS&p=D&yr=0&mn=2&dy=12&id=p84071410134
https://stockcharts.com/h-sc/ui?s=GOEV&p=D&yr=0&mn=2&dy=12&id=p84071410134
https://stockcharts.com/h-sc/ui?s=MULN&p=D&yr=0&mn=2&dy=12&id=p84071410134
$KAVL +338% #DDAmanda Video Analysis
#1 Stock Scanner/Screener
LOL. If there is no real insider buying of shares, it`s a red flag. It shows no confidence in the company - if you don`t backup with money, it`s empty words.
Re: Steve, his insider and his scam.
PlantX, some facts on the present situation;
During Q3 2024, the Company demonstrated growth, still, with revenue only totaling
$ 9,184,678, and a net loss of $ 5,699,913 - it`s far from becoming profitable.
Five investment rounds and a high debt is the highly concerning reality.
Management shares; Individual Insiders 0.208% about 2000 shares in total.
If there is no real insider buying of shares, it`s a red flag. It shows no confidence in the company - if you don`t backup with money, it`s empty words.
PDYN: Low float little known AI software play an easy target for crowd orbit shot. Getting found. KAVL like move at anytime.
ESM Responds to EU Commission Call For Strategic Projects!
https://ceo.ca/@globenewswire/euro-sun-mining...ssion-call
Part of article;
ESM wishes to confirm that the Company has formally begun proceedings to list its Rovina Valley Project (the “Project”)
with the European Commission as a “strategic project” for the European supply of critical minerals.
Following a meeting held on May 27, 2024 with the Romanian Ministry of Economy, the application for the Project to be
designated as a “strategic project” within the European Commission’s Critical Raw Materials Act was sanctioned.
This positive development will take place whilst Romania continues towards overhauling its
existing mining legislation to align with the Critical Raw Materials Act.
IMO very important news, yet the market do not react (so far?), with a gain in the share price - maybe a delayed effect will play out.
With the project officially supported by the EU commision, the Romanian side will also play ball - no more stalling -
cause now it`s in the interest of the new government to succeed with it, not only the company itself -
the CEO`s 4% stake of OS is also a significant fact that will pay of for all of us.
PDYN: Low floater AI starting to rip. Crowd finding. Big close & AHs orbit shot on tap?
SIPC....Interesting read on Preferential killing of melanoma cells by a p16-related peptide
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10445694/#BIO059965C29
SIPC NEWS! Preferential killing of melanoma cells by a p16-related peptide R & D
https://finance.yahoo.com/news/sipp-industries-announces-strategic-r-164600249.html
$VHAI 0.13 NASDAQ stock is heating up like $TPET and $KITT today!
PlantX Life - Certain things taking place lately, makes me for now to be more carefull... I do simply need to check in to new developments/troubles?
So, it`s a HOLD from my side - do your own research on all parts of PlantX.
BMXI volume today
RENT........TUP......MULN.......................https://www.mullenusa.com/mullen-go
@BLULLISH 🔥🩳🔥 Brett Harrison, former head of FTX US, has made a long thread regarding FTX US and his time there.
In December, Unusual Whales spoke to SBF where he said tokenized shares of $AMC, $GME were backed 1:1.
Here is a video of Brett saying the same from Sept from a AMA with Reddit.
Brett Harrison, former head of FTX US, has made a long thread regarding FTX US and his time there.
— unusual_whales (@unusual_whales) January 15, 2023
In December, Unusual Whales spoke to SBF where he said tokenized shares of $AMC, $GME were backed 1:1.
Here is a video of Brett saying the same from Sept from a AMA with Reddit. pic.twitter.com/56FB1a2Ako
Message in reply to:
The Crypto Coins for $AMC & $GME were used for false locates of Naked Shorts, there are way more $AMC coins than there are shares aka FTX and were never authorized by AMC or GME and many others
There are many more then there are also the AMC Conterfiets/Brazilian Depository Reciepts, which also exceed the shares
I continue to HODL real shares and average down when I have spare cash
The Crypto Coins for $AMC & $GME were used for false locates of Naked Shorts, there are way more $AMC coins than there are shares aka FTX and were never authorized by AMC or GME and many others
There are many more then there are also the AMC Conterfiets/Brazilian Depository Reciepts, which also exceed the shares
I continue to HODL real shares and average down when I have spare cash
OH YEAH-IT APPEARS LOTS OF FOLKS WERE TRYING TO LOAD AND COULD NOT.
MEME STOCKS AND MEME CRYPTO COINS ARE ON THE VERGE.
WILL SOON BE SHARING SOME OF MY CRYPTO STOCK AND CRYPTO COINS PLAYS
FOR ENTERTAINMENT INFORMATION PURPOSE ONLY
CRYPTO STOCKS AND CRYPTO COINS CAN MAKE FOLKS MULTI MILLIONAIRES OVERNIGHT
GO CRYPTO COIN AND CRYPTO STOCKS
ES Mining successfull meeting with Ministry of Economy (December 2023) and the Romanian Ministry of Environment, Water, and Forests (January 2024).
https://www.theglobeandmail.com/investing/mar.../research/
https://www.eurosunmining.com/wp-content/uplo...un-PPT.pdf
CHPT......FREY.......MULN.......................https://www.mullenusa.com/battery
UP X 2 Or DOUBLE right now, see the PlantX board, as this is only the beginning.
https://investorshub.advfn.com/PlantX-Life-Inc-VEGA-38643
$GSAC
$GSAC DD super relevant https://t.co/tiZs8bVBE4
— L??KO (@Likko_G) May 21, 2024
The Bounce back 46% today - we are alive!
https://investorshub.advfn.com/PlantX-Life-Inc-VEGA-38643
https://www.facebook.com/groups/281295698392004
Check in vegainvestors.com for more info on the company.
CTNT................................MULN................................................https://stockcharts.com/h-sc/ui?s=CTNT&p=W&yr=1&mn=3&dy=0&id=p96837884856
https://stockcharts.com/h-sc/ui?s=MULN&p=W&yr=1&mn=3&dy=0&id=p96837884856
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UPDATE; 5-1-22
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Really good study sheet on Candlestick Patterns
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HAPPY 4TH OF JULY FROM 1776 / into 2021 AMERICA WILL BE GREAT AGAIN
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tsla story/
Nikola Tesla 1856 - 1943 and his contribution to science and humanity.
i think was greater than all inventors.
https://www.youtube.com/watch?v=ZZkkHhyWFus
Nikola Tesla's Biography and Life New Full Documentary 2016
https://www.youtube.com/watch?v=hCFtjt-9Sfc
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PER IHUB MGMT |
02-07-2021
DISCLAIMER: ONLY FOR MICK
https://investorshub.advfn.com/boards/profilea.aspx?user=1012
*DISCLAIMER *The Board Monitor and herewith, are not licensed brokers and assume NO responsibility for the actions,
investment decisions, and or messages posted on this forum.
• We do NOT recommend that anyone buy or sell any securities posted herewith.
ANY trade entered into risks the possibility of losing the funds invested.
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