Why Serve Robotics Stock Climbed 14% in October

Shares of Serve Robotics (NASDAQ: SERV) were moving higher last month after the maker of restaurant-delivery robots passed a milestone, deployed its 1,000th delivery robot, launched its robots in Chicago, and announced a multiyear partnership with DoorDash.

According to data from S&P Global Market Intelligence, the stock finished the month up 14% on the news. As you can see from the chart, it was another volatile month for Serve Robotics, but the gains in the first half of the month, led by those news items, were enough to push the stock up double digits in October.

SERV data by YCharts

Serve Robotics gets a boost

On the last day of September, Serve Robotics launched its service in the Chicago metro area, marking its first entry into the Midwest.

Chicago marked the fifth market that Serve has entered, and it launched in 14 neighborhoods in Chicago.

The development-stage company, which is still earning minimal revenue, gave investors more good news on Oct. 6, saying it had deployed its 1,000th third-generation robot, and it said it was on track to have 2,000 active robots by the end of the year.

Finally, the biggest news for the company came on Oct. 9, as it announced a new partnership with DoorDash. The partnership will start in Los Angeles and will expand to other cities over time. DoorDash joins Uber Eats as a partner of Serve Robotics, showing that the company is working closely with the top two restaurant delivery apps in the country.

The stock jumped 29% on that news; however, it gave back much of those gains when it announced a $100 million direct stock offering the next day. Shares fell 16% on the news, as investors tend to dislike share dilutions. Serve said it would use the money for general corporate purposes, including working capital.

Over the rest of the month, the stock remained volatile, though there was no major news on Serve. Northland raised its price target on the stock from $23 to $26 and reiterated its outperform rating, noting the new partnership with DoorDash as well as multiple expansion in physical AI. The stock gained on that report on Oct. 13.

Image source: Serve Robotics.

What's next for Serve Robotics?

Serve is still bringing in less than $1 million in revenue a quarter, and it finished the second quarter with $116.7 million, showing why the company decided to raise another $100 million last month.

The company is growing quickly, with delivery volume growth up 80% quarter over quarter, but it's still a long way from generating material revenue.

The DoorDash partnership is certainly a step in the right direction toward that goal.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash, Serve Robotics, and Uber Technologies. The Motley Fool has a disclosure policy.