Autonomous Delivery Scaling And Platform Integrations Will Transform Long Term Potential

Catalysts

About Serve Robotics

Serve Robotics operates an autonomous sidewalk delivery network that uses small electric robots to move food and other goods in urban neighborhoods.

What are the underlying business or industry changes driving this perspective?

• Rapid scaling of the fleet, from hundreds toward 2,000 robots and a stated long-term vision of 1 million units, points to a much larger delivery base that can spread fixed costs over more orders and support higher revenue and earnings potential.
• Deep integrations with Uber and DoorDash, which together cover over 80% of the US food delivery market, give Serve direct access to a large volume of transactions that can lift fleet utilization, delivery volumes and ultimately fleet revenue.
• Growing consumer adoption of online and on demand delivery, combined with restaurants seeking labor light logistics, aligns directly with Serve’s Autonomy as a Service model and supports the shift from one time software sales toward recurring software and data revenues that may carry higher margins.
• Expansion from 1 to 5 operational hubs and into multiple new cities, with over 3 million people and more than 1 million households now covered, broadens the addressable market for deliveries and branding, which can influence top line growth and the ability to scale operating costs more efficiently.
• The physical AI and data flywheel, reinforced by the Vayu Robotics acquisition, is already linked to higher autonomous run times, improved average speeds and lower intervention rates, which can reduce operating costs per delivery and support better gross margins over time.

Assumptions

This narrative explores a more optimistic perspective on Serve Robotics compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Serve Robotics's revenue will grow by 331.3% annually over the next 3 years.
• The bullish analysts are not forecasting that Serve Robotics will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Serve Robotics's profit margin will increase from -4124.9% to the average US Hospitality industry of 8.1% in 3 years.
• If Serve Robotics's profit margin were to converge on the industry average, you could expect earnings to reach $12.6 million (and earnings per share of $0.14) by about January 2029, up from $-80.2 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 239.3x on those 2029 earnings, up from -13.8x today. This future PE is greater than the current PE for the US Hospitality industry at 21.9x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.26%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Serve is investing heavily ahead of expected 2026 scale, with GAAP operating expenses of $30.4 million and adjusted EBITDA loss of $24.9 million in Q3 2025. If revenue growth does not keep pace with this higher cost base, the company could face prolonged losses that weigh on net margins and delay any path toward positive earnings.
• The long-term vision relies on deploying 2,000 robots in 2025 and ultimately scaling toward 1 million units. This requires continued capital, capable supply chains and sustained partner demand. If any of these factors stall, utilization per robot could suffer and weaken both revenue and fleet level unit economics that underpin future earnings.
• Serve depends heavily on large platforms such as Uber and DoorDash for order volume. Increased bargaining power or changing priorities at these partners could squeeze Serve’s pricing or limit rollout pace, which would pressure fleet revenue growth and constrain the contribution margin that supports overall profitability.
• The model assumes that advances in physical AI and the Vayu acquisition will keep driving higher autonomous run times, faster speeds and fewer interventions. If autonomy progress slows or requires ongoing high R&D spending of more than $10 million per quarter, the savings in operating costs per delivery may not fully offset the investment burden, which would limit improvement in gross margins and operating margins.
• Rapid geographic expansion into multiple cities with different weather, regulations and urban layouts introduces long-term execution and regulatory risks. If certain municipalities restrict sidewalk robots or Serve struggles to maintain reliability and safety at scale, that could cap delivery volumes, reduce branding and software opportunities and hold back both revenue and earnings potential.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Serve Robotics is $26.0, which represents up to two standard deviations above the consensus price target of $18.86. This valuation is based on what can be assumed as the expectations of Serve Robotics's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $26.0, and the most bearish reporting a price target of just $15.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $156.0 million, earnings will come to $12.6 million, and it would be trading on a PE ratio of 239.3x, assuming you use a discount rate of 8.3%.
  
• Given the current share price of $14.84, the analyst price target of $26.0 is 42.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.