Why I'm Taking Goliath Over the Digital Banking App Dave
The digital banking app Dave (NASDAQ: DAVE) recently completed its merger with the blank-check company VPC Impact Acquisition Holdings III and began trading on the Nasdaq Stock Market. Dave's first week on its own was volatile, with the stock down about 42%, until a major pop on Jan. 13 that helped it recoup some of the losses.
The company's name is a biblical reference -- Dave sees itself as the underdog against the Goliaths of traditional banking, and its mission is to help consumers avoid being taken advantage of and get into better financial shape. However, I don't think this Dave has what it takes to take down Goliath. Here's why.
Dave launched with the noble goal of saving money on overdraft fees, which the company says cost its users $300 to $400 per year on average. Its flagship product, ExtraCash, essentially extends customers up to $200 in advance so they can send funds to their bank accounts and avoid paying an overdraft fee, which can be as high as $34. Members then pay back Dave at no interest. Dave makes money on the product through fees that users pay to get the advance cash wired sooner or through optional tips that users leave.
Source Fool.com
