Dave (DAVE): The Profitability Pivot

1. Executive Summary

Dave began as a fast-growing, money-losing neo-bank famous for its cartoon bear mascot and small cash advances. The thesis has shifted dramatically: Dave has achieved GAAP profitability (rare for fintechs) by using AI to underwrite micromarket loans better than payday lenders. It is now a bet on operating leverage.

Key Thesis Points

1. ExtraCash: Their core product—small, fee-based advances—has a lower loss rate than credit cards because Dave sees the user's bank account (cash flow underwriting).
2. CAC Advantage: Unlike Chime or SoFi who spend hundreds to acquire a user, Dave acquires them cheaply via the "viral" need for immediate liquidity (word of mouth).
3. Valuation Disconnect: Often trading at <2x sales despite being profitable and growing 20%+, suggesting the market still views it as a "SPAC bust."

2. Business Overview

• Lending: ExtraCash advances (primary revenue).
• Banking: Dave Spending account (interchange fees).
• Side Hustle: Connecting users to gig economy jobs (lead gen fees).

3. Risks

• Regulatory Crackdown: The CFPB (Consumer Financial Protection Bureau) constantly scrutinizes "earned wage access" and overdraft products. A rule change could cap their fees.
• Credit Cycle: In a deep recession, "subprime" borrowers (Dave's core demograhic) default first.