Reported Company:

Dave Inc.

Researcher Company:

Bleecker Street Research

Price at Report Date:

Close Price Day after report date:

90.43

% Decline Day after Report Date:

% Decline vs Yesterdays Date:

-11.578

Summary

Bleecker Street Research has published a report on (NASDAQ: DAVE), alleging the fintech company is engaging in predatory lending practices disguised as consumer-friendly financial services. The report highlights regulatory risks and questions the sustainability of Dave’s business model.

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

Questionable Lending Practices

• Dave’s main product, ExtraCash, allows users to receive advances with fees ranging from $3 to $25.
• Customers are encouraged to tip Dave, adding to the already high effective interest rates, which can approach 500% APR

Regulatory Threats

• The Consumer Financial Protection Bureau (CFPB) has proposed new rules that could classify Dave’s products as loans, subjecting them to stricter regulations.
• The CFPB specifically called out tipping practices, which comprise a significant portion of Dave’s revenue.

Financial Health Concerns

• Despite its revenue, Dave has never reported a yearly profit since going public.
• The company’s financial stability is heavily reliant on tipping and processing fees, which are under regulatory scrutiny.

Charitable Gimmicks

• Dave’s partnerships with charities like Feeding America are criticized for misleading marketing, where only a small portion of “tip” revenue is donated.

Activ8 Finance Analysis

Bleecker Street’s report raises serious concerns about the long-term viability of Dave, Inc., especially in light of potential regulatory changes. The reliance on high fees and tips, coupled with mounting regulatory scrutiny, suggests that investors should exercise caution. The company’s financial model appears unsustainable, with significant downside risks if regulatory bodies enforce stricter rules on its lending and tipping practices.