Contemplating Investment in Serve Robotics Shares Prior to March 6th?
Uber's long-time tech partner, Nvidia, seemed to have lost faith in autonomous delivery startup Serve Robotics at the end of 2024, dumping its shares in the company. The abrupt exit sent Serve's stock plummeting over 50%. Serve, known for developing autonomous last-mile delivery robots powered by Nvidia tech, was expected to provide an update on its financial performance on March 6.
The company has been making headlines for its efficient autonomous delivery service in Los Angeles since 2022, achieving a delivery accuracy rate of 99.94% with its Level 4 autonomous robots and outperforming human delivery workers by tenfold. Its latest Gen3 robot is five times more powerful than its predecessor, providing faster speed, longer runtime, a wider range, and a 50% reduction in operational costs.
But despite its promising growth potential, as highlighted in an Ark Investment Management study predicting a $450 billion autonomous food delivery market by 2030, Serve is currently burning cash faster than it's making it. A huge part of its losses stem from the high expenses needed to develop and deploy its AI hardware and software.
Wall Street expects Serve to bring in $1.9 million in revenue for 2024 with a massive 820% jump from 2023, followed by an additional 598% growth in 2025. However, the company's success hinges on the successful deployment of 2,000 autonomous robots this year under a deal with Uber Eats. Serve launched its service in Miami in February, adding Shake Shack and Mister O1 Extraordinary Pizza to its roster of delivery partners through Uber Eats.
But investors should remain cautious. Despite the recent stock dip, Serve remains pricy, with a P/S ratio of 213.6 based on its trailing-12-month revenue. This makes Serve seven times more expensive than Nvidia, which trades at a modest P/S ratio of 28.5. Even if Serve manages to fulfill its ambitious growth plans, it may still struggle to justify such a high valuation. As a result, investors may want to tread carefully until Serve's valuation aligns more closely with its business performance.
- Given the recent stock dip after Nvidia's withdrawal, investors might question Serve Robotics' financial health in 2025, considering its current expense-to-revenue ratio.
- To achieve its projected revenue growth of $1.9 million in 2024 and a substantial jump in 2025, Serve Robotics needs to effectively deploy its autonomous delivery robots in collaboration with companies like Uber Eats.
- The fact that Serve Robotics is currently burning cash faster than it's making it highlights the importance of focusing on cost reduction in its AI hardware and software development processes for long-term investing in their stock.
- As autonomous food delivery continues to gain momentum with an anticipated market value of $450 billion by 2030, the probability of significant returns on investing in Serve Robotics stock mainly depends on its ability to scale operations and improve profitability over the coming years.
