Serve Robotics Inc. (NASDAQ: SERV), a leading autonomous sidewalk delivery company, saw its stock price plummet 6.62% in pre-market trading following the announcement of a $100 million registered direct offering of common stock. The significant drop reflects investors' concerns about potential share dilution and its impact on existing stockholders.

According to the company's statement, Serve Robotics has entered into securities purchase agreements with certain institutional investors for a registered direct offering of 6,250,000 shares of common stock. The transaction is expected to generate approximately $100 million in gross proceeds before deducting placement agent fees and other offering expenses. The company intends to use the net proceeds for general corporate purposes, including working capital.

While the capital raise could strengthen Serve Robotics' financial position and support its growth initiatives, the market's negative reaction suggests that investors are wary of the potential dilution of their ownership stakes. This concern is particularly notable given the company's recent positive developments, including a multiyear strategic partnership with DoorDash announced earlier, which had previously driven the stock up by 28.6% to $17.68.

As the market digests this news, investors will be closely watching how Serve Robotics utilizes the newly raised capital and whether it can translate into enhanced growth and profitability in the competitive autonomous delivery sector. The company's ability to execute its business strategy effectively with these additional resources will be crucial in regaining investor confidence and potentially reversing the current stock price decline.