Serve Robotics Inc. (SERV): A Bull Case Theory

We came across a bullish thesis on Serve Robotics Inc. (SERV) on Value Investing Subreddit Page by msrichson. In this article, we will summarize the bulls’ thesis on SERV. Serve Robotics Inc. (SERV)’s share was trading at $8.72 as of Feb 27^th.

Serve Robotics (SERV) was originally the robotics division of Postmates before becoming an independent company in 2021 following Uber’s acquisition of Postmates. Uber remains a shareholder and utilizes SERV’s autonomous delivery robots for last-mile Uber Eats deliveries in Los Angeles. Customers have the option to use these robots for a lower delivery fee, and SERV is now scaling its fleet to 2,000 robots by year-end while expanding into Austin, TX.

With 59 active robots operating 465 daily hours, SERV generated $112,288 in quarterly revenue, equating to $241 per robot hour. If SERV successfully scales to 2,000 robots with 50% uptime, it would result in 1,000 daily active robots operating 7,800 hours per day, translating to a projected quarterly revenue of $169.2 million and an annual revenue of $676.7 million. Given SERV’s current market cap of under $500 million, the company appears significantly undervalued relative to its revenue potential.

Despite ongoing cash burn from operations and R&D, the business model presents a compelling opportunity. Uber alone generates billions in food delivery revenue, and its continued partnership and equity stake in SERV underscore the strategic value of autonomous delivery. While the market has reacted negatively to NVIDIA’s exit and broader bearish sentiment, these concerns may be overblown. If SERV maintains liquidity and executes its scale-up plan, profitability is within reach. The stock presents a strong long-term investment case, as its potential market opportunity and Uber’s support position it for substantial growth.

Serve Robotics Inc. (SERV) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held SERV at the end of the third quarter which was 5 in the previous quarter. While we acknowledge the risk and potential of SERV as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SERV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.