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Serve Robotics Surges 180% in 6 Months: How Should You Play the Stock?
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Serve Robotics (SERV - Free Report) shares have surged 179.9% in the past 6 months, outperforming the Zacks Computer & Technology sector’s return of 15.2% and the Zacks IT Services industry’s rally of 19.2%.
The rise in shares can be attributed to SERV’s strong revenue growth on increased core delivery and branding revenues.
SERV’s Quarter Details
Revenues increased to $0.22 million from $0.06 million in the year-ago quarter. The increase resulted primarily from $0.04 million in revenues from Serve Robotics’ software services contract with Magna.
SERV's Delivery, Software and Branding revenues rose year over year to $0.11 million, $0.04 million and $0.07 million, respectively, in the third quarter of 2024.
In the third quarter of 2024, SERV operated 59 daily active robots, marking a 23% quarter-over-quarter increase and a 97% year-over-year surge. These robots collectively generated an average of 465 daily supply hours, reflecting a 21% quarter-over-quarter rise and a 108% year-over-year upsurge.
Despite the revenue boost, Serve Robotics faces profitability challenges due to high operational costs, and continued investments in technology and expansion.
Serve Robotics’ Prospects Ride on Robots & Last-Mile Delivery
SERV’s long-term prospects ride on growing demand for last-mile delivery of food and other items on partner platforms that include Uber Eats and 7-Eleven. The company, which was spun off from Uber Technologies (UBER - Free Report) in 2021, counts NVIDIA, Uber, 7-Ventures and Delivery Hero’s corporate venture units as its investors.
Serve Robotics has expanded its partner base by forming agreements with Magna and Ouster (OUST - Free Report) to accelerate the development of its latest robotic products.
Magna has become a contract manufacturer for SERV’s technology and the first robots are expected to roll out by the end of the fourth quarter of 2024.
Serve Robotics is on track to deploy 2,000 robots by the end of 2025 through its agreement with Uber, anticipating an annual revenue run rate of $60-$80 million once the robots are fully deployed and achieve full utilization.
SERV's expanding robotics offering has bolstered its competitive position in the last-mile delivery market, wherein major players like DoorDash and Amazon currently dominate.
Serve Robotics is expanding its Los Angeles operations to include Downtown LA, Sawtelle and Westwood. It secured delivery partnerships with Shake Shack (SHAK - Free Report) and Wing, enhancing its service reach and market presence in the region.
The recently announced acquisition of assets of Vebu is expected to strengthen SERV’s footprint in the restaurant industry.
What Should Investors Do About SERV Stock?
Serve Robotics’ Value Score of F suggests a stretched valuation at this moment.
SERV’s sequential revenue decline in the third quarter of 2024 is concerning. The company also suffers from customer concentration.
Serve Robotics currently has a Zacks Rank #3 (Hold). We suggest investors wait for better entry points in the stock.
Image: Bigstock
Serve Robotics Surges 180% in 6 Months: How Should You Play the Stock?
Serve Robotics (SERV - Free Report) shares have surged 179.9% in the past 6 months, outperforming the Zacks Computer & Technology sector’s return of 15.2% and the Zacks IT Services industry’s rally of 19.2%.
The rise in shares can be attributed to SERV’s strong revenue growth on increased core delivery and branding revenues.
SERV’s Quarter Details
Revenues increased to $0.22 million from $0.06 million in the year-ago quarter. The increase resulted primarily from $0.04 million in revenues from Serve Robotics’ software services contract with Magna.
Serve Robotics Inc. Price and Consensus
Serve Robotics Inc. price-consensus-chart | Serve Robotics Inc. Quote
SERV's Delivery, Software and Branding revenues rose year over year to $0.11 million, $0.04 million and $0.07 million, respectively, in the third quarter of 2024.
In the third quarter of 2024, SERV operated 59 daily active robots, marking a 23% quarter-over-quarter increase and a 97% year-over-year surge. These robots collectively generated an average of 465 daily supply hours, reflecting a 21% quarter-over-quarter rise and a 108% year-over-year upsurge.
Despite the revenue boost, Serve Robotics faces profitability challenges due to high operational costs, and continued investments in technology and expansion.
Serve Robotics’ Prospects Ride on Robots & Last-Mile Delivery
SERV’s long-term prospects ride on growing demand for last-mile delivery of food and other items on partner platforms that include Uber Eats and 7-Eleven. The company, which was spun off from Uber Technologies (UBER - Free Report) in 2021, counts NVIDIA, Uber, 7-Ventures and Delivery Hero’s corporate venture units as its investors.
Serve Robotics has expanded its partner base by forming agreements with Magna and Ouster (OUST - Free Report) to accelerate the development of its latest robotic products.
Magna has become a contract manufacturer for SERV’s technology and the first robots are expected to roll out by the end of the fourth quarter of 2024.
Serve Robotics is on track to deploy 2,000 robots by the end of 2025 through its agreement with Uber, anticipating an annual revenue run rate of $60-$80 million once the robots are fully deployed and achieve full utilization.
SERV's expanding robotics offering has bolstered its competitive position in the last-mile delivery market, wherein major players like DoorDash and Amazon currently dominate.
Serve Robotics is expanding its Los Angeles operations to include Downtown LA, Sawtelle and Westwood. It secured delivery partnerships with Shake Shack (SHAK - Free Report) and Wing, enhancing its service reach and market presence in the region.
The recently announced acquisition of assets of Vebu is expected to strengthen SERV’s footprint in the restaurant industry.
What Should Investors Do About SERV Stock?
Serve Robotics’ Value Score of F suggests a stretched valuation at this moment.
SERV’s sequential revenue decline in the third quarter of 2024 is concerning. The company also suffers from customer concentration.
Serve Robotics currently has a Zacks Rank #3 (Hold). We suggest investors wait for better entry points in the stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.