Dave Skyrockets 147% in a Year: Time to Buy the Stock or Stay Away?

Core Viewpoint - Dave Inc. (DAVE) has demonstrated exceptional stock performance, with a 147.3% increase over the past year, significantly outperforming its industry and the S&P 500 composite [1][4][17] Stock Performance - DAVE's stock has outperformed its industry peers, with Byrna Technologies Inc. (BYRN) gaining 58.7% and UiPath (PATH) declining by 44.7% over the same period [1] - In the last six months, DAVE shares increased by 95.9%, while the industry and UiPath experienced declines of 3.7% and 17.1%, respectively [4] - The stock closed at $83.84, which is 49% lower than its 52-week high of $125.00 [4] Credit Performance - In Q4 2024, DAVE experienced a 44% year-over-year increase in originations and a 53-basis-point improvement in the 28-day delinquency rate, attributed to its proprietary AI underwriting model, CashAI [6] - CashAI's real-time assessment of bank account transaction data enhances credit risk evaluation compared to traditional FICO-based methods [7] Revenue and Margin Expansion - DAVE's top line grew by 38% year-over-year in Q4 2024, driven by an increase in the transacting member base and effective customer acquisition [8] - The variable margin increased by 15% year-over-year, with fixed expenses declining by 800 basis points due to improved credit performance and cost management [10] - The adjusted EBITDA margin expanded by 1940 basis points year-over-year, indicating continued margin expansion potential [11] Capital Returns and Liquidity - DAVE's trailing 12-month return on equity (ROE) stands at 47.7%, significantly higher than the industry average of 6.4% [12] - The current ratio for DAVE in Q4 2024 was 8.05, well above the industry's 1.63, indicating strong short-term debt coverage capabilities [14] Future Prospects - The Zacks Consensus Estimate projects DAVE's 2025 revenues at $424.5 billion, reflecting a 22.3% increase year-over-year, with earnings expected to grow by 26.9% [16] - For 2026, revenue and earnings are anticipated to rise by 21.6% and 22.2% year-over-year, respectively [16] Investment Recommendation - DAVE's advancements in credit risk management, consistent revenue growth, margin expansion, high capital returns, and robust liquidity position suggest a strong investment opportunity [17]