10 Small Cap Stocks with High Potential

07. Dave Inc. (NASDAQ:DAVE)

Number of Hedge Fund Holders: 13 

Market Cap as of October 5: 545.70 Million

Average Analysts’ Target Price as of October 5: $61.86

Year to date Share Price Gain: 413.66%

Dave Inc. (NASDAQ:DAVE) is a promising small-cap stock that deserves attention for its innovative financial services platform. The company, headquartered in Los Angeles and founded in 2015, offers a range of financial products, including budgeting tools, short-term liquidity options, and a digital banking solution. Its unique products, such as ExtraCash, a short-term liquidity tool, and the Dave Banking digital checking account, have made it a popular choice for Americans seeking accessible financial solutions. Given its robust growth trajectory and strategic initiatives, Dave Inc. (NASDAQ:DAVE) is well-positioned to capitalize on the expanding financial technology market, making it a strong candidate for small-cap stocks with high potential.

In its second quarter of 2024, Dave Inc. (NASDAQ:DAVE) reported impressive financial metrics, showcasing the strength and scalability of its business model. The company achieved a 31% year-over-year increase in revenue, reaching $80.1 million, driven by an 18% growth in Monthly Transacting Members (MTMs) and an 11% increase in Average Revenue Per User (ARPU). These figures highlight Dave’s ability to expand its user base while enhancing user engagement, contributing to its strong revenue performance.

Additionally, the company’s adjusted EBITDA also reached record levels, underscoring its operational efficiency and effective cost management. Dave’s non-GAAP variable profit surged by 57% year-over-year to $51.8 million, representing a 65% margin relative to GAAP revenue, up approximately 1,100 basis points from the same period last year. This significant margin expansion was supported by continued optimization of its AI-powered underwriting engine, which has processed over 105 million unique ExtraCash transactions since its inception.

Furthermore, Dave Inc. (NASDAQ:DAVE) credit performance showed resilience, with a 28% improvement in its 28-day delinquency rate compared to the previous year, reaching 2.03%. The company also recorded a reduction in credit loss provisions, which decreased approximately 9% year-over-year, despite a 37% growth in ExtraCash originations. This improvement reflects the effectiveness of its risk management strategies and its focus on maintaining a healthy balance sheet.

Given its strong financial performance, innovative product offerings, and focus on sustainable growth, Dave Inc. (NASDAQ:DAVE) presents a compelling investment opportunity for those looking to add a high-potential small-cap stock to their portfolio.