Why Serve Robotics The stock fell 52% in August

Actions of Serve Robotics (SERVE) took a dive last month as investors appeared to believe the stock was previously overbought. A brief pop in the restaurant delivery robot company’s second-quarter earnings report wasn’t enough to counter the downward momentum after Nvidia took a stake in the robotics company.

According to data from S&P Global Market Intelligence, stocks ended August down 52% on the news. As you can see from the chart below, the stock has been down for most of its sessions over the past month.

Data SERV by YCharts.

Serve Robotics still has a lot to prove

The main news from the company last month was its Q2 earnings report. Serve is still an early-stage company at this point, so its numbers don’t tell the whole story, but they’re still significant.

Revenue rose from the year-ago quarter to $468,375, although it fell sequentially as it ended its service contract with Magna, a Canadian auto parts company.

Serve’s daily active robots, or the number of robots making daily deliveries, continued to grow, doubling to 48 active robots, and daily supply hours, or the average number of hours the robots are available, increased from 152 to 385.

At the same time, Serve also announced a new autonomous robot delivery pilot Shake Shack in Los Angeles. The new project will work through Uber EATINGcapitalizing on its previous agreement, which aims to deploy up to 2,000 bots on the Uber Eats platform.

Serve Robotics’ lockup period also expired at the end of July, which may have triggered some of the selling, but the main reason for the stock’s decline last month is that it was virtually unknown before it surged on July 19. after Nvidia revealed a stake in the company.

Even after the pullback in August, the stock has essentially tripled from where it was trading before the Nvidia deal was announced.

Image source: Serve Robotics.

What’s next for Serve Robotics

Serve’s valuation is still astronomical as it has minimal revenue and expects revenue to decline sequentially in Q3 as its contract with Magna has expired. Magna was the main source of its revenue from software services, which accounted for the majority of its revenue in the first half of the year.

At this point, Serve’s technology looks promising, as does the partnership with Nvidia, but the deal is too small to fully evaluate.

The service could still be years away from generating significant revenue, let alone a profit.