Last April, a former UberUBER

subsidiary specializing in robotic deliveries was seen as a promising candidate to end the IPO market’s Great Freeze. Instead, it fell over 76% in its opening week of trading. But stirred by excitement around its new robotic products and automation potential, Mr. Market has given Serve RoboticsSERV

new life, with the stock rising over 615% from its 2024 lows. However, its recent gains can also be a cautionary tale of what happens when investors give poor-performing names an inch — the company’s management is now taking a mile.

• Despite Serve’s $770M market capitalization, the robotics firm generated just $1.67M in revenue in the last four quarters —- during which it reported a net loss of $33.1M, or 12x its LTM revenue.
• The losses are increasingly worrisome for Serve, which raised $32.3M in two separate offerings last year — and announced on Tuesday that it would raise $80M in a common stock offering.

A dilution solution: In most worlds, Serve would not have survived the treacherous underwriting processes at most banks. But christened by rideshare giant Uber and investor NvidiaNVDA

, the company self-drove itself onto Wall Street. Since then, it has leveraged its market cap to sell new shares — diluting existing investors and costing them in the process. Today, Serve has raised over 100x more than it has ever made from operations, selling investors a bill of goods for what comes next — avocado robots, flying drones, you name it. But for now, as the pipe dream it sells investors seems far away from profitability, executives and the company are enriching themselves on investors’ dime.