Reported Company:

Dave Inc.

Researcher Company:

Night Market Research

Price at Report Date:

Close Price Day after report date:

90.43

% Decline Day after Report Date:

% Decline vs Yesterdays Date:

-11.578

Dave Inc. Activist Short Report Published by Night Market Research 07.25.2024

Summary

Night Market Research published a short report on Dave Inc. (NASDAQ: DAVE), a fintech company specializing in cash advances and earned wage access (EWA) services. The report highlights significant risks posed by regulatory changes and operational challenges, particularly regarding Dave’s reliance on its troubled banking partner, Evolve Bank & Trust.

Who is Dave Inc.?

Dave, Inc. is a fintech company offering cash advances and banking services, targeting users who need small loans to avoid overdraft fees. The company markets itself as a consumer-friendly alternative to traditional banks, but it primarily earns revenue through fees and tips associated with these advances.

Key Points from Report

Regulatory Storm Clouds

• New CFPB regulations classify EWA services like ExtraCash as credit, subjecting them to Truth in Lending Act (TILA) requirements.
• California and New York are advancing state-level regulations that cap fees and prohibit practices like default tipping, threatening Dave’s revenue model.

Banking Partner in Crisis

• Evolve Bank & Trust, Dave’s sole banking partner, faces a federal cease-and-desist order, potentially stalling Dave’s growth.
• Evolve’s connection to the bankrupt Synapse raises concerns about its financial stability, possibly affecting Dave’s operations.

Dubious Practices

• Dave’s revenue heavily depends on expediting fees and tips, which are solicited through manipulative app designs.
• The company’s tipping model is under scrutiny, with average APRs on advances reaching as high as 913%.

Activ8 Finance Analysis

The Night Market Research report presents a compelling case for caution regarding Dave Inc. The heavy regulatory risks and the instability of its banking partner, Evolve Bank & Trust, create significant uncertainty about the company’s future profitability. Investors should be wary of the potential for substantial revenue losses as new regulations come into effect.