Down 16% Today, Should You Buy the Dip in Serve Robotics Stock?

Serve Robotics (SERV), famously backed by Nvidia (NVDA), is down sharply today after its latest financial update and news of a substantial acquisition. SERV is expanding its operations by acquiring Vebu Inc., known for its avocado-processing robot, Autocado - already in pilot testing at a California Chipotle (CMG) location. 

This acquisition - made for an undisclosed amount - marks Serve's entry into the restaurant kitchen space, addressing labor shortages and enhancing efficiency. By integrating Autocado technology, Serve aims to broaden its automation offerings beyond delivery. 

Under the terms of the all-stock deal, Vebu's founder, Buck Jordan, will join Serve to lead kitchen automation efforts. Serve is positioning itself as a comprehensive provider of automation solutions in the restaurant industry, and this expansion into back-of-house operations is expected to significantly enhance Serve's market reach and operational scale.

Serve Robotics also reported Q3 earnings today, with a GAAP loss of $0.20 per share, and revenue of $0.22 million, up more than 250% year over year. SERV completed $32.3 million in capital raise transactions to close the quarter with a cash balance of $50.9 million. 

Investors have sent the stock down more than 16% today heading into the weekend, though SERV is still up more than 236% over the past six months. 

Analyst coverage is fairly light, but the mean price target of $15 suggests the “Strong Buy” robotics stock can rise nearly 65% over the next year. That said, as today's price action suggests, SERV is best reserved for investors who can stomach the heightened volatility that comes with investing in unprofitable growth stocks.