DAVE's ExtraCash Acts as Life Support for Underbanked Finances

Dave Inc.’s DAVE ExtraCash service is a vital resource for the underbanked, a group often marginalized by traditional banking. This demographic made up 14.2% of U.S. households in 2023, according to the Federal Deposit Insurance Corporation.

The underbanked turn to neobanks despite having accounts at traditional banks because of limited access to affordable credit and high fees. That’s why ExtraCash has become essential for the underbanked, a group that often struggles to access small-dollar loans without a strong credit history.

ExtraCash addresses the pain points of the underbanked by providing interest-free cash advances of up to $500, free of any traditional credit checks. This kind of business model aligns with the long-term trend of alternative data underwriting, wherein institutions tend to bank account history and spending patterns to evaluate a customer’s creditworthiness. This innovation allows DAVE to provide credit to customers with a lack of credit history that traditional Fair Issac Corporation-based systems often deny.

The recent change in Dave’s optional fee model, which allowed members to access credit for as little as $0 per transaction, to a simplified 5% fee structure with a $5 minimum and $15 cap, strengthens its position among the underbanked. This new fee setup improves transparency around the ExtraCash advances, providing a more predictable and affordable option for filling financial gaps. The instant nature of receiving the funds serves perfectly to alleviate the financial stress of liquidity needs shouldered by the underbanked.

Mobile banking popularity is rising, with research anticipating more than 79% population to use online banking by 2029 . Hence, Dave’s mobile-first platform is well-positioned to serve the increasing needs of the population, particularly those who fall under the financially vulnerable demographic.

ExtraCash, like a savior, empowers these consumers by having them avoid the costly fees of traditional banking and getting a hold of their cash flow, underlining its crucial role in promoting a higher financial resilience and inclusion.          

DAVE’s Price Performance, Valuation & Estimates

The stock has skyrocketed 657.6% in the past year, significantly outperforming CoreCard CCRD and Qifu Technology QFIN, and the industry as a whole. The industry has rallied 45.8%. CoreCard and Qifu Technology have surged 156% and 133.2%, respectively.

1-Year Price Performance

From a valuation standpoint, DAVE trades at a forward price-to-earnings ratio of 25.69, above the industry’s and Qifu Technology’s 23.15 and 5.89, respectively. CoreCard trades at 30.79.

P/E - F12M

DAVE has a Value Score of F.

The Zacks Consensus Estimate for Dave’s earnings for 2025 is pegged at $8.74 per share, indicating a 66.8% surge from the year-ago quarter’s actual.

DAVE currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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