One of the trends that defined financial markets in 2021 was the special purpose acquisition company (SPAC) boom. Companies rushing to go public left investors wondering how long the frenzy would last. Although the momentum would die down, it rose again just a few months later when the blank-check partner of former President Donald Trump’s new media venture, Digital World Acquisition (NASDAQ:DWAC), shot to unexpected levels overnight. Now, 2022 may be in for its own share of SPAC debuts. A few days into the year, fintech banking app Dave (NASDAQ:DAVE) began trading after merging with its SPAC partner. While DAVE stock was quick to plunge following its initial public offering (IPO), shares have now been unexpectedly rising all morning.
It has been a volatile day for DAVE stock so far as shares experience higher than average trading volume. DAVE shot up by more than 30% within the first hour of trading today. Before noon, it would rise by more than 40%, only to drop again by 12%. The stock’s performance since then has been turbulent, but it’s currently in the green by roughly 20%. Even with today’s gains, though, it’s still down more than 30% for the week.
As is often the case in such scenarios, social media traction has picked up as digital investment communities speculate about what’s going on with this new arrival. So, let’s take a closer look at DAVE stock and the reasons behind these volatile patterns.
What Is Happening with DAVE Stock
- According to the company’s 8K filing with the U.S. Securities and Exchange Commission (SEC), many investors with 22,417,767 shares of DAVE stock opted to redeem them for cash. With shares priced at $10, they walked away with profits of over $224 million, leaving the company’s Trust Account with $29.6 million. Both lower cash amounts and higher float counts can lead to volatility.
- Jan. 6 saw DAVE stock begin trading on the Nasdaq at $8.27 per share. While the stock would dip to almost $7, it ultimately rebounded and closed out its first trading day at $8.53. It has made no significant gains since then — until today.
- Based in Los Angeles, California, Dave counts Mark Cuban as an early investor. It also received a $210 million PIPE (private investment in public equity) investment from Tiger Global Management. Other investors include Wellington Management and Corbin Capital Partners. After announcing plans to go public in the summer of 2021, DAVE stock received a valuation of $4 billion.
- The company was named after the hero of the David and Goliath story. This name reflects Dave’s mission of providing consumers with a more affordable alternative to the big banks. Dave says it wants to “level the financial playing field.”
- Aside from not charging customers overdraft fees or requiring a minimum balance, Dave also features a Side Hustle component. Through this feature, it aims to help gig-economy workers secure more jobs and keep track of their finances.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.