Crypto holdings: Telegram’s revenue soared to $525 million thanks to crypto

Telegram’s crypto holdings rose to $1.3B in H1 2024, driven by Toncoin sales and strategic deals.

Telegram's Resilience Amid Durov's Detention

According to the Financial Times, Telegram has informed investors that the recent detention of founder Pavel Durov by French police has not had a "material impact" on the app's performance. Financial reports indicate a significant increase in the value of the company's cryptocurrency holdings, which is strengthening its business outlook.

In the first half of 2024, Telegram's digital asset surged to $1.3 billion, up from nearly $400 million at the end of the previous year, based on unaudited financial reports. This increase in capital, along with proceeds from the sale of Toncoin, reflects the company's robust growth trajectory.

The situation escalated in August when the company's founder was detained by French authorities and faced multiple charges.

However, in an investor report dated October 22, Telegram stated that the arrest had not significantly affected its business, as the charges were solely against its founder. The company reported revenue of $525 million for the six months ending in June, representing a 190% increase compared to the same period last year. Nearly half of this revenue, amounting to $225 million, stemmed from a one-time agreement with an unnamed partner, granting Toncoin exclusive status for small businesses to purchase advertising on the app.

Telegram Maintains Financial Resilience Amid Challenges Following Durov's Arrest
Despite some fluctuations in Toncoin's price following Durov's arrest, Telegram has continued to generate significant revenue from cryptocurrency sales. In the first half of 2024, the company recorded $353 million in cryptocurrency transactions and reported a profit after taxes of $335 million, underscoring its financial resilience.

However, experts caution that future advertising revenue may be challenged due to the platform's associations with issues related to sexual violence and terrorist content. In response, Telegram has acknowledged the need to enhance content moderation and control.

While Durov fully owns Telegram, he has also secured approximately $2.4 billion in debt financing, which is due for repayment by 2026. In September, the company utilized part of its proceeds to repurchase $124.5 million in bonds.

Serve Robotics SERV stock has surged 179.9% in the past 6 months, the rise in shares can be attributed to SERV’s strong revenue growth on increased core delivery and branding revenues.

SERV’s Quarterly Details

Revenues rose to $0.22 million, up from $0.06 million in the same quarter last year. This growth was mainly driven by $0.04 million in revenue generated from Serve Robotics' software services contract with Magna.

Serve Robotics Inc. Price Consensus Chart | Serve Robotics Inc. Quote
In the third quarter of 2024, Serve Robotics Inc. reported year-over-year revenue increases across its Delivery, Software, and Branding segments, generating $0.11 million, $0.04 million, and $0.07 million, respectively.

During this quarter, SERV operated 59 daily active robots, representing a 23% increase from the previous quarter and a remarkable 97% rise compared to the same period last year. These robots collectively achieved an average of 465 daily supply hours, reflecting a 21% quarter-over-quarter increase and a 108% year-over-year improvement.

Despite these revenue gains, Serve Robotics continues to face profitability challenges due to high operational costs and ongoing investments in technology and expansion.

Future Prospects

Serve Robotics' long-term outlook is closely tied to the growing demand for last-mile delivery services for food and other items, partnering with platforms like Uber Eats and 7-Eleven. Originally spun off from Uber Technologies (UBER) in 2021, the company has attracted investments from notable players such as NVIDIA, Uber, 7-Ventures, and Delivery Hero’s corporate venture units.

To further enhance its product offerings, Serve Robotics has expanded its partnerships by forming agreements with Magna and Ouster (OUST), aimed at accelerating the development of its latest robotic innovations.

Magna has signed on as a contract manufacturer for Serve Robotics' technology, with the first robots anticipated to launch by the end of the fourth quarter of 2024.

Serve Robotics is on track to deploy 2,000 robots by the end of 2025 through its partnership with Uber, projecting an annual revenue run rate of $60-$80 million once the robots are fully operational and optimized for utilization.

The expansion of SERV's robotics offerings has enhanced its competitive edge in the last-mile delivery sector, which is currently dominated by major players like DoorDash and Amazon.

Additionally, Serve Robotics is broadening its operations in Los Angeles to encompass Downtown LA, Sawtelle, and Westwood. The company has secured delivery partnerships with Shake Shack (SHAK) and Wing, further extending its service reach and market presence in the area.

Moreover, the recent acquisition of assets from Vebu is expected to strengthen SERV’s position in the restaurant industry.

What Should Investors Consider Regarding SERV Stock?

Serve Robotics currently has a Value Score of F, suggesting that its valuation may be overstretched. The company's sequential revenue decline reported in the third quarter of 2024 raises concerns, especially considering its dependence on a small number of customers. This reliance makes the company vulnerable to fluctuations in demand, which could further impact its financial stability.

Investors may be cautious as they assess the long-term sustainability of Serve Robotics' business model in light of these challenges. Overall, the combination of a low Value Score and declining revenues indicates potential risks for the company's future performance.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.