Serve Robotics Soars: Exploring the Future of Last-Mile Delivery
Serve Robotics (SERV) has witnessed a remarkable surge of 370.1% since its initial public offering on April 18, 2024. In just six months, SERV shares have soared by 602.8%, significantly outpacing the Zacks Computer & Technology sector’s increase of 2.4% and the Zacks IT Services industry’s gain of 15.5%.
This impressive performance is driven by an escalating demand for food and other items on platforms like Uber Eats and 7-Eleven. Founded in 2021 as a spin-off from Uber Technologies, Serve Robotics counts NVIDIA (NVDA), Uber, 7-Ventures, and Delivery Hero among its strategic investors.
As we look ahead to 2025, the pressing question remains: will this upward trend in SERV shares continue? Let’s delve into the details.
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Growing Demand in Last-Mile Delivery Strengthens SERV
Dramatic growth in demand for last-mile delivery is positioning SERV favorably against industry giants like DoorDash and Amazon. The company has expanded its partner base to include notable names like Shake Shack (SHAK), Ouster (OUST), Wing Aviation, and Magna.
In June 2024, SERV enhanced its delivery capabilities by entering Koreatown and partnering with new local merchants via Uber Eats. The collaboration with Shake Shack expands SERV’s footprint in Los Angeles, while the partnership with Wing streamlines package delivery within a 6-mile radius without requiring modifications to merchants’ locations.
During the third quarter of 2024, SERV operated 59 daily active robots, marking a 23% increase from the previous quarter and a substantial 97% year-over-year growth. These robots delivered an average of 465 daily supply hours, reflecting a 21% quarter-over-quarter increase and a 108% rise year-over-year.
Serve Robotics maintains that their robots could potentially lower delivery costs to below $1, compared to current costs incurred by human couriers, making on-demand delivery more economical in their service areas. The recent acquisition of Vebu assets will further enhance SERV’s presence in the restaurant sector.
Advanced Robots Set to Elevate SERV’s Future
The introduction of SERV’s third-generation robots promises to carry more goods and facilitate additional deliveries, all while reducing costs.
These robots are now equipped with NVIDIA’s Jetson Orin module, increasing on-board computing power fivefold, Ouster’s new REV7 digital lidar, and improved sensors. This technology allows SERV robots to operate faster, travel nearly twice the distance on a single charge, and spend six additional hours in the field each day.
Each updated robot is designed with an expanded cargo bin, capable of carrying four large 16-inch pizzas, representing a 15% increase in volume over previous models.
In collaboration with Magna International, SERV has initiated mass production of these advanced robots. The company plans to deploy 250 throughout Los Angeles in the first quarter of 2025 and aims to enter its first market outside of L.A. by the end of the second quarter.
Through an agreement with Uber, Serve Robotics aims to deploy 2,000 robots by 2025, projecting an annual revenue run rate of $60 to $80 million once these robots are fully operational.
Positive Earnings Outlook for SERV
Recent estimates suggest an improvement in SERV’s earnings for 2025, with expected losses now at 64 cents per share, down from 66 cents in the past month. The first-quarter 2025 loss estimate remains steady at 20 cents per share.
Serve Robotics Inc. Price and Consensus
Serve Robotics Inc. price-consensus-chart | Serve Robotics Inc. Quote
Should You Buy, Sell, or Hold SERV Stock?
Current technical indicators for SERV are bullish, as the stock trades above both the 50-day and 200-day moving averages.
SERV Above Key Moving Averages
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On the other hand, SERV is considered overvalued at present, reflected by its Value Score of F. Concerns arise from a sequential revenue decline in the third quarter of 2024, with expectations that revenues will be weighted toward the latter half of 2025, which may impact share price momentum short term.
Despite these challenges, SERV’s growing fleet of robots presents a positive outlook for long-term investors. Those who already own the stock might find the company’s growth opportunities rewarding over time.
Currently rated with a Zacks Rank #3 (Hold), investors may want to consider waiting for a more favorable entry point before adding to their positions. To discover a list of today’s top Zacks #1 Rank (Strong Buy) stocks, click here.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report
Serve Robotics Inc. (SERV): Free Stock Analysis Report
Shake Shack, Inc. (SHAK): Free Stock Analysis Report
Ouster, Inc. (OUST): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
