Al Root

Serve Robotics, an artificial-intelligence-trained autonomous-robot company, reported weaker-than-expected sales for its latest quarter.

Shares are falling as investors reel from recent losses.

Serve's AI-trained robots deliver food and other goods on the West Coast. They operate on sidewalks and have a maximum speed of roughly six miles an hour -- a reasonable jogging pace for a human.

Thursday evening, Serve announced fourth-quarter sales of $176,000. Wall Street was looking for closer to $250,000.

Shares dived 7.8% in after-hours trading at $7.30 shortly after results were released. Shares dropped 4.4% in Thursday trading to $7.92, while the S&P 500 and Dow Jones Industrial Average fell 1.8% and 1%, respectively.

There were some positives in the quarter. The company added a new city to its food-delivery network. Its robots are now in Los Angeles and Miami. More than 1,000 restaurants and 300,000 people have used the service, a "2x increase year over year."

The company's cash balance at the end of the year was about $123 million, and it raised an additional $91 million in January. Wall Street projects cash use of about $15 million in 2025.

The sales miss isn't what investors wanted to see, but sales aren't the primary objective -- building and deploying more robots is. The company says it is on track to make some 2,000 robots in 2025, increasing the deployed fleet from about 100 at the end of 2024.

Magna International builds the robots in Detroit. Uber deploys them in its Uber Eats platform.

Thursday's late drop added to investors' recent pain. Serve stock has been on a wild ride lately. The stock was down about 53% through Thursday trading over the past month.

The key to the implosion was last month's revelation that Nvidia had sold its position in the start-up. Investors learned that when Nvidia filed its quarterly holdings report with the SEC in February. Serve shares were almost $23 apiece before the filing.

Nvidia was an early-stage investor in Serve. Public companies, such as Nvidia, don't always hold shares of companies they seed for the long run. Exactly why Nvidia sold isn't clear; it didn't immediately respond to a request for comment.

Nvidia's ownership, however, definitely impacted how investors viewed Serve. Valuing any start-up isn't easy. Serve Robotics has limited revenue and doesn't make money yet. It has an expanding AI-related business though.

When the 2,000-plus robots are working at full capacity, the fleet's sales potential is $60 million to $80 million. That level of sales is still years away.

Investors will be watching for sales to ramp up in 2025. Wall Street projects revenue of almost $12 million, up from $1.8 million in 2024.

How investors will treat Serve stock as sales ramp up remains to be seen. However they choose to value the company, investors won't have the comfort of knowing Nvidia is investing alongside them.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 06, 2025 16:38 ET (21:38 GMT)

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