Problems at Serve Robotics (SERV)
Serve Robotics (NASDAQ: SERV — $711 million) claims to be the “future of sustainable, self-driving delivery” and produces autonomous sidewalk delivery robots for food deliveries. The company has prominent partnerships with Uber Eats and DoorDash and is a retail investor favorite at the intersection of robotics and last-mile delivery.
Investors believe Serve’s robots can lower the cost of food deliveries by eliminating human couriers and make cities greener and safer by taking cars off the road. Management often argues that you “do not need a two-ton car to deliver a two-pound burrito.”
Serve started as an internal project within Postmates in 2017 and was spun out shortly after Uber acquired Postmates in December 2020. The company was listed on the NASDAQ through a reverse merger in April 2024 and faces intense competition from other robot delivery startups such as Starship, Nuro, Avride, and Coco Robotics. The company lost about $80 million on $2 million in revenue over the last twelve months, and its stock has about $100 million in average daily trading volume.
The Bear Cave believes Serve Robotics is a well-intentioned experiment with poor economics and a subpar solution for last-mile delivery.
Serve’s robots travel on public sidewalks and are not always treated with dignity and respect. In some cases, people flip the robots over for amusement or to steal the food carried inside.
Some of Serve’s problems are self-inflicted. A video posted on X last month by entrepreneur Nikhil Krishnan showed a Serve robot awkwardly forcing its way through a restaurant’s sidewalk seating while on a delivery. The post was captioned:
“There’s all these ground robots in Miami doing deliveries.
Seeing them in action makes me less bullish on these sidewalk robots as a form factor - people just don’t like dealing with them, they bully them (maintenance costs go up), and they’re slow.
Feel like the most likely end state is autonomous cars carrying food deliveries and drones for lighter ones.”
The Bear Cave spent hours observing Serve robots in our hometown of Brickell and reached a similarly negative conclusion.