Dave Inc. (DAVE): A Bull Case Theory

We came across a bullish thesis on Dave Inc. on Komodo Capital’s Substack. In this article, we will summarize the bulls’ thesis on DAVE. Dave Inc.'s share was trading at $213.13 as of July 28^th. DAVE’s trailing and forward P/E were 59.87 and 24.88 respectively according to Yahoo Finance.

Dave Inc. (DAVE) operates an asset-light, high free cash flow conversion model as a B2C neo-bank focused on Earned Wage Access (EWA), a structurally superior and more transparent alternative to payday lending. Its flagship service offers personalized short-term advances up to $500, underwritten via Plaid APIs with rapid data refresh cycles, enabling highly accurate credit assessment without hard credit checks.

The company benefits from significant operating leverage, word-of-mouth-driven customer acquisition, and accelerating top-line growth, with Q1 ’25 origination volumes up 46% YoY to $1.53 billion and sales up 47% YoY. Gross margins have expanded from the low 40% range in 2022 to 72%, supported by low customer acquisition costs ($18) and improving delinquency rates (1.5% on a 28-day basis). As the largest scaled underwriter in the EWA space, DAVE enjoys a data advantage that continually refines its underwriting models, further reducing losses and fueling growth. Competitively, DAVE outpaces rivals such as Chime, EarnIn, and MoneyLion with superior efficiency and the most comprehensive dataset.

The company addressed regulatory headwinds by eliminating tipping fees and adopting a transparent 5% flat fee, improving predictability and profitability. Management projects FY’25 sales growth of 38%+ and $190 million in FCF (~19x FY’25 FCF), with 2026 FCF potentially reaching $270 million (~13x FCF), offering room for margin expansion and buybacks. Despite a 700% share price increase over the past year, DAVE remains undervalued given its growth trajectory and dominant position. With further market penetration, improved underwriting, and a sticky customer base, the stock offers a compelling risk/reward profile and potential for significant upside.

Previously we covered a bullish thesis on Dave Inc. (DAVE) by Next 100 Baggers in May 2025, highlighting its niche in serving underbanked Americans, strong unit economics, and improved monetization. The stock has appreciated approximately 10% since our coverage as growth and profitability accelerated. The thesis remains intact. Komodo Capital shares a similar view but emphasizes underwriting data advantages and transparency improvements.

Dave Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held DAVE at the end of the first quarter which was 27 in the previous quarter. While we acknowledge the potential of DAVE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.