Serve Robotics (SERV) shares have taken a recent nosedive, plummeting by a significant 37% in the past month. This sharp decline starkly contrasts with the Zacks Computer & Technology sector’s gain of 4.5% and the Zacks IT Services industry’s return of 3.2% over the same period.
The tumultuous journey of this AI-powered last-mile robot delivery service provider began with its public equity offering on April 18, marking its entry into the Nasdaq Capital Market under the ticker “SERV.”
Post its market debut, SERV witnessed a meteoric rise of 197.8%. However, the applause was short-lived as lackluster second-quarter 2024 results led to a 9.8% drop in its share prices since Aug. 13.
Despite reporting improved revenues of $0.47 million, a significant uplift from the year-ago quarter’s $0.06 million, SERV witnessed a alarming 50.5% sequential decline setting off alarms among investors. Nonetheless, the company noted an 80% surge in second-quarter delivery and branding revenues, with Daily Supply Hours skyrocketing by 28% within the same period.
Questioning the Drop: SERV Shares Underperform Sector
The recent dip in SERV shares leaves investors pondering – is this the opportune moment to dive into the stock amidst this turbulence?
Delving into Serve Robotics Growth in Last-Mile Delivery Domain
SERV’s fortunes are tethered to the escalating demand for last-mile delivery services on platforms such as Uber Eats and 7-Eleven. The company, having been spun off from Uber Technologies in 2021, boasts strategic investments from corporate giants like NVIDIA, Uber, 7-Ventures, and Delivery Hero.
With robust liquidity on its side, SERV eyes deploying 2000 robots across the United States by 2025, having already navigated through the design phase of a third-generation robot.
The company amassed $35.8 million through its public equity offering and an additional $15 million via a private placement. Its coffers were further reinforced with a fresh influx of $20 million, swelling its cash and cash equivalents to $28.8 million as of June 30, 2024.
The faith in robotics to drastically cut delivery costs to under $1 – a competitive edge over human couriers – has nudged Serve Robotics into a trajectory of making on-demand delivery more economic and accessible within its operational realms.
Quoting the ARK Invest report, SERV stands to benefit from the projected $450 billion global market for food and parcel delivery by robotic and drone systems by 2030.
Stiff competition from industry stalwarts like DoorDash and Amazon notwithstanding, SERV’s expanding partner ecosystem comprising Shake Shack, Ouster, and Magna, among others, accentuates its growth narrative.
Deciphering SERV Stock’s Investment Potential
Trading above the 50-day moving average, SERV exhibits a bullish technical indicator. Furthermore, the Zacks Consensus Estimate for SERV’s 2024 earnings has slightly improved, now hovering at an anticipated loss of 85 cents versus previous forecasts.
Serve Robotics Inc. Price and Consensus
Serve Robotics Inc. price-consensus-chart | Serve Robotics Inc. Quote
However, SERV stock appears overvalued presently, as underscored by a Value Score of F. The sequential revenue slump in the second quarter of 2024 and customer concentration issues loom as key concerns for the company’s financial health.
Notwithstanding the risks, SERV’s growing robotics fleet augurs well for long-term investors. Existing holders may ride out the storm, projecting promising growth prospects for the company in the extended horizon.
Although the recent dip may seem enticing, a cautious approach is warranted. SERV’s current Zacks Rank #3 (Hold) implies prudence in seeking an optimal entry point for potential investors.
