Serve Robotics Inc. (SERV Quick QuoteSERV - Free Report) entered third-quarter 2025 with momentum after an aggressive multiquarter expansion of its autonomous sidewalk-delivery fleet. But the stock has lost 17.1% since the earnings release on Nov. 12, significantly underperforming the Zacks Computers - IT Services industry, the broader technology sector, and the S&P 500. Investors are now asking whether the reset reflects a temporary sentiment swing or deeper concerns around losses, dilution and operational intensity.

The company’s narrative remains ambitious — expanding from 1,000 robots to 2,000 by year-end, accelerating adoption across five major U.S. metros, deploying faster and cheaper Gen3 robots and laying early foundations for 10x revenue growth in 2026. Yet the tension between long-term scale potential and near-term cash burn is now front and center.

A review of third-quarter 2025 results and updated estimates shows both sides of the investment story — the rapid buildout of autonomous delivery infrastructure and the financial strain required to support it.

Serve Robotics’ Share Price Performance

Since reporting third-quarter earnings, SERV stock has plunged 17.1%, far worse than the Zacks Computers – IT Services industry’s 3.2% decline, the Zacks Computer and Technology sector’s 2.5% dip, and the S&P 500’s 3.4% pullback. In the year-to-date period, the stock is down 35.7%, compared with an 18.8% decline in the industry, a strong 23.2% rise for the sector and a 14.2% gain for the S&P 500.

At around $8.68 (as of Nov. 20), SERV trades near the lower half of its volatile 52-week range of $4.66 to $24.35 — a swing of roughly 424% from low to high — showing a wide disconnect between long-term enthusiasm and short-term caution.

SERV Performance Post Q3

Image Source: Zacks Investment Research

SERV Valuation: A High-Growth Premium With Early-Stage Risk

Serve Robotics trades at a 25.81X forward 12-month price-to-sales (P/S) ratio, a notable premium to the industry average of 16.14X. However, the current multiple is below the company’s one-year median of 32.57X and far below the extreme highs seen within the past year, where the valuation range spanned 14.9× to nearly 380X.

SERV Valuation

Image Source: Zacks Investment Research

SERV’s Q3 Performance: Rapid Growth Meets Heavy Investment

Serve Robotics delivered another quarter of strong operational progress. Third-quarter revenue reached $687,000, up 209% year over year, driven by expanded fleet revenue, 120% sequential growth in branding revenue and greater deployment density across metro hubs. Delivery volume jumped 66% quarter over quarter, marking more than 300% growth from a year ago.

The company crossed 1,000 robots deployed, expanded its presence across Los Angeles, Miami, Dallas, Atlanta and Chicago, and rolled out its multi-year strategic partnership with DoorDash (DASH Quick QuoteDASH - Free Report) while deepening its long-standing relationship with Uber (UBER Quick QuoteUBER - Free Report) . Management highlighted that these two platforms represent more than 80% of the U.S. food-delivery market, enabling Serve Robotics to route robots interchangeably across platforms for higher utilization.

Despite these achievements, the financial picture remains challenging. Serve Robotics reported an operating loss of $34.8 million in the third quarter, driven by $30.4 million in operating expenses and a gross loss of $4.4 million. Research and development spending reached $13.4 million, while operations and G&A rose sharply due to new market launches and acquisition integration. Cost of revenue increased to $5.1 million, magnifying negative gross margins as the company builds capacity ahead of revenue.

Liquidity remains strong at $210 million, supplemented by an additional $100 million raised post-quarter. However, equity financing continues to dilute shareholders, with 67.8 million shares now outstanding.

SERV’s Estimate Revisions Signal Caution

Analysts have shifted expectations meaningfully in the past week. The Zacks Consensus Estimate for 2025 widened from a loss of $1.38 per share to a loss of $1.55, compared with a loss of 67 cents per share reported in the year-ago period. For 2026, analysts now expect a loss of $1.66 per share, deeper than last week’s expectation of a $1.50 loss.

Revenue revisions also point to uncertainty. The consensus mark calls for a 131.3% decline in 2025 revenues, followed by a 7% decline in 2026 — reflecting the lumpy nature of early commercialization and the absence of meaningful unit economics until fleet utilization improves.

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SERV Stock’s Key Challenges: Costs, Complexity and Capital Needs

Serve Robotics continues to wrestle with a cost base that is both large and difficult to reduce in the near term. The company posted a third-quarter operating loss of $34.8 million, driven by $30.4 million in operating expenses tied to market expansion, fleet growth, acquisition integration and sustained investment in autonomy and hardware. Research and development alone reached $13.4 million, highlighting how expensive it is to build safe, reliable sidewalk-delivery systems. These investments are core to Serve Robotics’ strategy, but they also keep gross margins sharply negative. With third-quarter cost of revenues at $5.1 million against just $687,000 in revenues, the business remains far from breakeven. Scaling a robot fleet ahead of demand is inherently margin-dilutive until utilization improves, operating hours lengthen and autonomy meaningfully reduces human oversight.

The complexity of operating autonomous delivery robots across major cities also adds financial pressure. Sidewalk environments differ widely by terrain, weather, infrastructure and pedestrian activity, creating significant variability in support, maintenance, monitoring and route-planning requirements. Cold-weather traction issues in Chicago, humidity exposure in Miami, irregular sidewalk layouts in Atlanta and dense pedestrian corridors in Los Angeles all require ongoing adjustments. While these diverse conditions strengthen Serve Robotics’ autonomy models over time, they create near-term operating costs. Each city must be launched, stabilized and optimized before efficiencies appear. The integration of Vayu Robotics’ AI foundation models and Phantom Auto’s teleoperation technology promises long-run benefits but introduces transition costs as systems and processes are merged.

Capital intensity remains another structural challenge. Serve Robotics is expanding fleet manufacturing, autonomy infrastructure and city-level operations, all of which demand significant upfront funding. The company ended the third quarter with $210 million in liquidity and later added $100 million, yet its early economics still require heavy reliance on equity financing. With 67.8 million shares already outstanding and further capital needs likely, dilution remains a real concern. Although the debt-free balance sheet offers flexibility, Serve Robotics must continue reinvesting until utilization, scale and autonomy support sustainable unit economics.

What Could Go Right: Scaling, Utilization and Platform Leverage

There is also a significant opportunity. Serve Robotics’ growing fleet, strong partner ecosystem and rapid technology improvements could drive substantial long-term upside.

The Gen3 platform — leveraging Nvidia Orin compute and Ouster LiDAR — cuts build costs by 65% and improves autonomy, range and durability, forming a key foundation for future margin expansion. Fleet size surpassed 1,000 in the third quarter, and management expects 2,000 robots to deploy in mid-December. Delivery volume is compounding; daily supply hours increased 713% year over year, and reliability sits near 99.8%.

Serve Robotics is also beginning to monetize branding, software, data and licensing. Branding revenue rose 120% sequentially. Dialogue with partners around licensing autonomy and data suggests a potentially high-margin revenue layer that could develop over time.

If autonomy improvements reduce intervention rates and increase average robot speed — trends management highlighted during the earnings call — unit economics could inflect more quickly than expected.

Conclusion

Serve Robotics offers one of the most ambitious scale-out strategies in the autonomous delivery space. Its partnerships with Uber and DoorDash, rapid fleet growth, expanding city footprint and accelerating physical-AI model all point toward large long-term optionality.

However, the stock’s decline reflects legitimate concerns — steep cash burn, heavy capital needs, dilution, negative gross margins and uncertain revenue timing. Estimate revisions show growing caution among analysts, and SERV’s Zacks Rank #4 (Sell) underscores the near-term risk profile. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Whether the worst is priced in depends on one key question: can Serve Robotics translate its rapidly expanding robot network into sustainable unit economics before dilution and losses overshadow the long-term opportunity? For now, the market appears unconvinced — but the next year of execution will be decisive.