Jason Wilk, the CEO of digital banking service Dave, has had his fair share of ups and downs in his career. One of the lowest points came in June 2023 when the company’s shares dropped below $5. In a desperate attempt to keep the company afloat, Wilk pitched investors at a conference for micro-cap stocks in Los Angeles, offering tiny $5,000 stakes in the firm.
“It was probably the hardest time of my life,” Wilk admitted in an interview with CNBC. “To go from being a $5 billion company to $50 million in 12 months, it was so freaking hard.” Despite the challenges, Dave managed to turn profitable in the months that followed and consistently exceeded Wall Street analyst expectations for revenue and profit. As a result, Dave is now the top gainer for 2024 among U.S. financial stocks, with a staggering 934% year-to-date surge.
The success of Dave is emblematic of a larger shift in the financial sector, according to JMP Securities analyst Devin Ryan. Investors had initially shied away from high-flying fintech companies in 2022 due to concerns about profitability. However, with the Federal Reserve easing rates, investors have flocked back to financial firms of all sizes, including alternative asset managers like KKR and credit card companies like American Express.
Fintech firms like Dave and Robinhood, the commission-free trading app, are particularly promising for the future, Ryan noted. Both companies have transitioned from money-losing ventures to highly profitable businesses by accelerating revenue growth while managing expenses effectively. While investment banks and alternative asset managers may have reached “stretched” valuations, fintechs still have a long runway for growth.
The election victory of Donald Trump has also boosted the financial sector, as investors anticipate a loosening of regulations and increased innovation under the new administration. This has benefited established players like JPMorgan Chase and Citigroup, as well as potential disruptors like Dave, which could see even more upside in a less restrictive regulatory environment.
Dave has carved out a niche among underserved Americans by offering fee-free checking and savings accounts and small loans to help users cover expenses until their next paycheck. The company makes money by charging a small fee per loan, providing customers with a more affordable alternative to traditional banking services.
While Dave has regained investor confidence and all seven analysts tracking the stock rate it as a “buy,” Wilk acknowledges that the company still has more to prove. Despite the significant improvements in the business since going public, the stock is priced 60% below the IPO price. Wilk remains optimistic about Dave’s future and is determined to continue proving the company’s value to investors.
