Potential Investment Prospect: Does the Stock of Serve Robotics Attract Given Ark Invest's Predicted Growth, as Valued at $860 Billion?
Serve Robotics, a small-cap company, is making waves in the logistics industry with its autonomous food delivery robots. The company, which expanded its service into Miami and Dallas earlier this year, and started operating in Atlanta in June, is currently facing a high price-to-sales (P/S) ratio of 368, making it 13 times more expensive than Nvidia.
Despite the high valuation, Serve Robotics' Gen3 robots operate with level 4 autonomy and run on Nvidia's Jetson Orin platform. The deployment of 2,000 new Gen3 models by Serve under its deal with Uber Eats will help validate its business model and pave the way for a larger rollout.
The company's financial performance for the first quarter of 2025 is raising some eyebrows. Serve reported a net loss of $13.2 million, putting it on track to exceed its 2024 net loss of $39.2 million. However, Serve's revenue stream is lumpy, but it showed a 150% increase from the previous quarter, suggesting momentum in its delivery business. Wall Street's consensus estimate suggests Serve's 2025 revenue could be $6.8 million, a 275% jump compared to 2024. If Serve delivers this revenue, its stock has a forward P/S ratio of 89.6.
If Serve delivers $50.6 million in revenue in 2026 as predicted by Ark Invest, its stock has a 1-year forward P/S ratio of 12. This potential revenue opportunity is part of Cathie Wood's firm's prediction of a potential $860 billion revenue opportunity by 2030 for autonomous delivery robots, drones, and trucks in the logistics industry.
The high valuation of Serve stock right now might not be justified based on its current performance, but could be considered reasonable when valued based on expected future revenue. Short- to medium-term investors should proceed with caution due to uncertainty about Serve's ability to deliver expected revenue.
Serve Robotics has approximately $197 million in cash on its balance sheet, offering some financial stability. However, the high P/S ratio of Serve stock makes it difficult to make a case for buying it right now.
In summary, Serve Robotics is a company to watch in the autonomous logistics industry. With its partnership with Uber Eats and expansion into new cities, it is making strides towards validating its business model. However, its high valuation and uncertain financial performance require careful consideration for investors.
