Serve Robotics (SERV – Free Report) shares have surged 370.1% since its public equity offering on April 18, 2024. In the trailing six months, SERV shares have jumped 602.8%, outperforming the Zacks Computer & Technology sector’s appreciation of 2.4% and the Zacks IT Services industry’s return of 15.5%.
Shares of this AI-powered last-mile robot delivery service provider’s long-term prospects ride on growing demand for food and other items on partner platforms that include Uber Eats and 7-Eleven. The company, which was spun off from Uber Technologies in 2021, counts NVIDIA (NVDA – Free Report) , Uber, 7-Ventures and Delivery Hero’s corporate venture units as its strategic investors.
Will this surge in SERV shares continue in 2025? Let’s dig deep to find out.
SERV Shares Beat Sector
Image Source: Zacks Investment Research
Strong Last-Mile Delivery DEmand Aids SERV
SERV’s expanding robotics offering is expected to improve its competitive position in the last-mile delivery space currently dominated by the likes of DoorDash and Amazon.
Serve Robotics’ expanding partner base, which includes Shake Shack (SHAK – Free Report) , Ouster (OUST – Free Report) , Wing Aviation and Magna, is noteworthy. In June 2024, SERV announced the expansion of its delivery operations into Koreatown and began onboarding new local merchants through its partnership with Uber Eats. Its partnership with SHAK expands SERV’s footprint in Los Angeles.
The collaboration with Wing allows SERV deliver all packages within a 6-mile area very quickly and help merchants adapt drone delivery without any modification to their facilities.
In the third quarter of 2024, SERV operated 59 daily active robots, marking a 23% sequential 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.
Serve Robotics believes robots have the potential to reduce the average delivery cost to under $1, lower than the delivery cost by human couriers currently, making on-demand delivery more affordable and accessible in the areas in which it operates.
The acquisition of Vebu assets is expected to strengthen SERV’s footprint in the restaurant industry.
Third-Generation Robots to Boost SERV’s Prospects
Serve Robotics’ third-generation robots can carry more goods, enable more deliveries and further reduce the cost of delivery.
Powered by NVIDIA’s Jetson Orin module that adds 5 times more on-board computing power, Ouster’s new REV7 digital lidar, and major upgrades to the robots’ sensor suite helps SERV robots move fast, travel approximately twice as far on a single charge, and spend 6 more hours in the field each day.
The latest robots support an expanded cargo bin that holds four large 16-inch pizzas, or 15% more volume than the previous robots.
SERV, in collaboration with Magna International, has started mass manufacturing of its third-generation robots.
Serve Robotics expects to deploy 250 of these robots around Los Angeles in the first quarter of 2025 and remains on track to enter its first new market outside of L.A. by the end of the second quarter of 2025.
Serve Robotics is on track to deploy 2,000 robots in 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 Earnings Estimates Show Upward Trend
Estimates for SERV’s 2025 have shown improvement as the figure is now expected to be a loss of 64 cents per share compared with 66 cents over the past 30 days.
Estimates for Serve Robotics’ first-quarter 2025 loss are currently pegged at 20 cents per share, unchanged over the past 30 days.
Serve Robotics Inc. Price and Consensus
Serve Robotics Inc. price-consensus-chart | Serve Robotics Inc. Quote
SERV Stock: Buy, Sell or Hold?
The technical indicator is bullish for SERV as the shares are trading above the 50-day and 200-day moving averages.
SERV Trades Above 50-Day & 200-Day SMA
Image Source: Zacks Investment Research
However, SERV stock is overvalued at this current moment, as suggested by the Value Score of F.
SERV’s revenue decline on a sequential basis in the third quarter of 2024 has been a concern. It expects revenues to be weighted towards the latter half of 2025. This is expected to hurt share price momentum in the near term.
Nevertheless, SERV’s expanding robotics fleet bodes well for long-term investors. Hence, investors who already own the stock may expect the company’s growth prospects to be rewarding over the long term.
Serve Robotics currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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