Mobile banking application provider David has enough cash to survive the current fintech downturn and reach profitability a year from now, CEO says Jason Wilck.

The Los Angeles-based company has been caught in the waves that have rocked the money-losing growth business world this year after went public in January. But Dave is not capsizing, despite a staggering 97% drop in shares through Nov. 18, Wilk said. Shares jumped 13% on Monday.

“We’re trying to dispel the myth of ‘Hey, this company doesn’t have enough money to get by,'” Wilk said. “We think that couldn’t be further from the truth.”

Few companies epitomize the rise and fall of fintech as much as Davidone of the best-known members of a new generation of digital banking providers supporting the likes of JPMorgan Chase and Wells Fargo. Co-founded by Wilk in 2016, the company had celebrities and millions of users of its app, which targets a demographic overlooked by traditional banks and relies on subscriptions and tips instead of overdraft fees.

Dave’s market cap soared to $5.7 billion in February before crashing as the Federal Reserve began its most aggressive series of rate hikes in decades. The decisions forced a sharp shift in investors’ preference for earnings from the previous mandate of grow at all costs and have rivals including bigger fintechs Carillonstaying private longer to avoid Dave’s fate.

“If you had told me that just a few months later we were worth $100 million, I wouldn’t have believed you,” Wilk said. “It’s hard to see your share price being such a low amount and a far cry from what it would be as a private company.”

Employee compensation

The change in fortune, which affected most of the companies that took the ad hoc acquisition company road to the public recently, turned his work into a “pressure cooker,” Wilk said. That’s at least in part because he cratered stock compensation for Dave’s roughly 300 employees, Wilk said.

In response, Wilk accelerated his plans to achieve profitability by reducing customer acquisition costs while offering users new ways to earn money on side gigs, including paid surveys.

The company said earlier this month that Q3 active users jumped 18% and lending on its cash advance product grew 25% to $757 million. While revenue soared 41% to $56.8 million, the company’s losses widened to $47.5 million from $7.9 million a year earlier.

Dave had $225 million in cash and short-term assets as of Sept. 30, which Wilk says is enough to fund operations until they turn a profit.

“We are expecting another year of burnout and we should be able to become profitable by the end of next year,” Wilk said.

Investor skepticism

Still, despite a recent rally in battered companies spurred by signs of slowing inflation, investors still don’t seem convinced of Dave’s outlook.

“Investors haven’t yet moved back into fintech more broadly,” Devin Ryan, director of fintech research at JMP Securities, said in an email. “In an environment of higher interest rates where the cost of capital has been dramatically increased, we see no reduction in investors challenging companies to operate with cash profitability…or at the very least, demonstrating a clear and credible path towards this.”

Among investors’ concerns are the fact that one of Dave’s main products is short-term loans; these could lead to increased losses if a recession hits next year, which is the expectation of many forecasters.

“One of the things that we have to continue to prove is that these are small loans that people use for gas and groceries, and because of that our default rates have remained constantly very low,” he said. Dave can be reimbursed even if users lose their jobs, he said, by dipping into unemployment benefits.

Investors and bankers expect a wave of consolidation among fintech startups and smaller public companies to begin next year as companies run out of funding and are forced to sell or close. This year, UBS backward of its agreement to acquire Wealthfront and fintech companies, including Stripe, have laid off hundreds of workers.

“We have to get through this winter and prove that we have enough money to do it and keep growing,” Wilk said. “We’re alive and vibrant, and we’re always here doing innovative things.”