Richtech Robotics: The Serve Robotics Sympathy Play With Superior Financials

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Serve Robotics Inc. stock surged after NVIDIA announced a small investment stake.Richtech Robotics Inc. benefits from being a sympathy play, with superior revenue and operating profit numbers compared...

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Financials\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-02 14:56 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4709587-richtech-robotics-the-serve-robotics-sympathy-play-with-superior-financials><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Serve Robotics Inc. stock surged after NVIDIA announced a small investment stake.Richtech Robotics Inc. benefits from being a sympathy play, with superior revenue and operating profit numbers compared...</p>\n\n<a href=\"https://seekingalpha.com/article/4709587-richtech-robotics-the-serve-robotics-sympathy-play-with-superior-financials\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4533","symbol_name":"AQR资本管理(全球第二大对冲基金)","start_time":0,"source_url":"https://seekingalpha.com/article/4709587-richtech-robotics-the-serve-robotics-sympathy-play-with-superior-financials","article_id":"2456429057","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1486204807/image_1486204807.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2456429057","pubTimestamp":1722581763,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Serve Robotics Inc. stock surged after NVIDIA announced a small investment stake.Richtech Robotics Inc. benefits from being a sympathy play, with superior revenue and operating profit numbers 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than delivery bots.Investors need to keep an eye on to what \"boring\" companies like Bunzl are doing because commercial cleaning supply companies will ultimately drive the demand for cleaning robots.   onurdongel Serve Robotics Inc. (SERV) is a developer of self-driving delivery robots. The stock has been on fire recently, with the announcement on July 19th of NVIDIA Corporation (NVDA) having taken a small investment stake being the prime catalyst for this two week run. Richtech Robotics Inc. (NASDAQ:RR) has been the beneficiary of some sympathy play run-off, with the stock price increasing from $1.13 to $1.49 over the last week. In addition to developing delivery robots, RR also has worker and cleaning robots in its arsenal. Up until a couple of weeks ago, RR and SERV were both trading at a little over $100 million in market cap. Now SERV is trading at well over half a billion: Data by YCharts Based purely on the numbers, it's hard to see how this discrepancy will last very long, as RR clearly has superior revenue and operating profit numbers: Data by YCharts For the quarter ended March 31, 2024, RR achieved $1.2 million in revenue with an operating loss of just under $1 million. Gross margins were 58% for the quarter. So RR is within striking range of operating profits, assuming it can continue to grow. That prospect seems achievable given that RR just completed an installation of its robot at Ghost Kitchens, the first of 240 locations. Fellow Seeking Alpha author Robert F. Abbott noted that RR claimed to be active in 80 cities across 37 states. So unless those 80 cities turn out to have dozens of locations each, 240 locations represent a significant growth rate. Contrast these numbers to SERV, which in its Q1 2024 has just under $1 million in revenue and a 63% gross margin, but also incurred an operating loss of $7.7 million. SERV has a much longer way to go before seeing black. This much heavier operating loss has resulted in SERV needing capital raises, thereby diluting its stock. SERV's share count has grown by over 50% from 24.5 million to 37.1 million (aided by the IPO) in less than a year. RR's share count has increased by around 10% during that time, from 62.2 million to 68.7 million. RR has a trailing 12-month operating loss and net loss of $1 million and $2.3 million, respectively. As of March 31, 2024, it has $8.2 million in cash and 9.5 million in working capital. A growing company like this could always use a cash injection. However, its burn rate relative to its available cash doesn't necessitate a highly dilutive raise any time soon. Shareholders of junior companies need to view dilution as a risk that comes with the territory, but I would rate RR's control over its share count to be above average for a company of its size and far superior to SERV. While in comparison to SERV, RR clearly dominates. As a standalone comparison to its sector, RR exhibits typical small cap traits. As it has yet to attain consistent profitability, there are no meaningful earnings multiples. Its price to sales metric is over 5 times higher than the sector median while its price to book value is 3 times higher. On the flip side, its revenue growth is 40% compared to a rather tepid 5% for the sector median. Gross margins are also considerably better, at 69% compared to the sector median of 31%. These numbers indicate that RR is a small company that has found a more profitable and growing niche. While not profitable nor a bargain based on financial performance right now, its potential to turn into a profitable value play is good if it keeps up this pace. Larger competitors could eventually eat RR's lunch, or on the flip side give in and try to buy the company out to immediately expand their own product line of robots. This is the risk and reward nature of small cap investing. Cleaning robots will be the next big trend AI uses tend to be seen as sexy, interesting or dangerous. Skynet, self-driving vehicles, and personal robot butlers take the center stage in the minds of the general public. But take a look at the rise of ChatGPT and customer service language bots and what that meant for the economy. The next big trend in AI isn't going to be \"scary movie superhero stuff\". It's going to be mundane, boring and mostly invisible tasks that save companies a lot of money. Just like chatbots. That's why I believe that cleaning robots will be the next big trend in AI. Delivery bots get the attention because they are visible, but cleaning bots that reduce or eliminate the need for human janitors will be a much bigger market. The global market is projected to grow to $8.7 billion by 2027 compared to $2.1 billion by 2030 for the delivery bot market. Bunzl (OTCPK:BZLFF) is one of the largest and longest-running global distributor of commercial cleaning and hygiene supplies. This company would normally be overlooked by technology chasers, but its business decisions will drive the growth of the cleaning bot industry thanks to its dominant position within the commercial cleaning segment. At the 7:25 mark of an interview with the CEO of Visionstate, one of Bunzl's junior technology partners, he goes onto explain how Bunzl's use of cleaning robots will create valuable data. Data that is not currently tracked by human custodians. A simple example would be washroom use within a mall and how that can tie in with various trends of foot traffic and sales. RR and its peers have an opportunity to be more than just hardware companies. The cleaning bot space does not come without risks. The heavy competition from large players and disappointing performance of iRobot Corporation (IRBT) - the original cleaning bot pureplay - may put a damper on how small caps are viewed. On the flip side, tepid investor sentiment thanks to the mediocre performance of IRBT can lead to bargains. Just because Blackberry (BB) sank doesn't mean that Smartphones failed and their manufacturers were bad investments. IRBT merely appears to be another Blackberry or Myspace. A first mover that got caught in stasis and watched the industry move on. A look at the product offerings of Richtech demonstrates a far more diverse and innovative set of robots than the Roomba. Conclusion: Buy RR in hopes more of the SERV hype shifts to it, stay for the potential profitable growth in a resurgent industry I have purchased shares in RR as an unambiguously superior sympathy play to SERV at their current relative valuations. There is no reason for RR to be five times cheaper than SERV at this moment. There is a good chance that a lot of the delta will be covered by a decrease in valuation of SERV. But I think more interest in RR as a sympathy play will lead to other investors doing their research and liking what they see.  Considering the valuation, RR has a wider range of robot offerings across multiple verticals, rather than being a one-hit wonder like IRBT or a niche focus like SERV. The financials aren't that bad for a small cap. While I do see a distinct risk of dilution, I also see a relatively quick path to profitable operations so that the dilution will be capped at a reasonable level.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":4,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2456429057"}