The Trump administration wants to boost the robotics industry! What are the fundamentals of Richtech Robotics (RR.US), whose stock price has soared under Dongfeng policy?

The Zhitong Finance App learned that recently, after promoting artificial intelligence innovation in the US, the Trump administration is turning its attention to the field of robotics technology. According to sources close to the Trump administration, US Secretary of Commerce Lutnick recently met frequently with the CEO of the robotics industry and made every effort to promote the development of the industry. The news also said that the Trump administration is considering issuing an executive order on robotics next year, and the US Department of Transportation is also planning to set up a special robotics task force before the end of the year.

At a time when the Trump administration plans to accelerate the development of the robotics industry, the stock price of robotics developer Richtech Robotics (RR.US), which is thought to be a potential beneficiary of the policy, soared. According to the data, Richtech Robotics' stock price has accumulated a cumulative increase of 29.30% since this week, rising 6.27%, 18.54%, and 8.77% in the past three trading days up to Thursday, respectively.

Trump administration plans to boost robotics industry

According to reports, the Trump administration is considering introducing an executive order similar to the nuclear industry for the robotics industry, which could bring deregulation and subsidies — a huge catalyst for many companies in the industry, especially small and medium-sized companies, to advance the development of the industry.

The Trump administration's political will to promote the development of the robotics industry stems from the need to compete with China's manufacturing industry. Compared to the US, China has a large number of robots (some estimates suggest that the number is at least double or even triple that of the US), and has highly automated factories, so they can turn off the lights, because robots use infrared cameras to “see” things, while humans use infrared devices in another building to check factory conditions when needed. These factories are known as “dark light factories (dark light factories).”

The US already has some factories that are close to unmanned operation. Take Tesla's (TSLA.US) plant in Nevada as an example. 90% of its operations are carried out autonomously, but the scale is not comparable to that of some factories in China. This makes it difficult for the US to compete in this field, and is one of the reasons why the US manufacturing industry has continued to decline for some time.

Without robots and automation, there is no solution to the stagnation of the US manufacturing industry. Advanced manufacturing, such as semiconductors, requires precision and precision, and assisting professionals requires extreme flexibility, and many robots of the past lacked these capabilities. It is unclear whether the US government is capable of solving this problem in the long run. Even if the current administration strives to succeed, successive administrations will need to focus on the same goals in order to truly achieve real change.

Richtech Robotics is sought after by investors

As Richtech Robotics' general-purpose robots are entering multiple industries, the robotics developer is seen as one of the potential winners. The company is currently involved in both the industrial and commercial sectors, and although the business is still small, it seems very real.

According to Richtech Robotics' website, its flagship robot, ADAM, which has been deployed, is “an AI-driven bartender, barista, and bubble tea producer that can surprise your customers and increase your profits.” This type of robot may not be impressive because most of them are viewed as showpieces rather than products that are truly transformative for the business.

In contrast, Richtech Robotics' industrial robots are even more impressive. The company's latest humanoid robot, Dex, is said to provide businesses with a completely different kind of automation experience. It debuted in late October this year, but there doesn't seem to be any actual deployment yet, so it's still too early to tell if it has received an order.

Richtech Robotics claims Dex “can be integrated into existing systems. This is a major selling point for many manufacturers and industrial companies striving to use traditional automation tools and robots, because traditional tools are often too bulky, overly specialized (or not cost-effective) to be directly integrated into the business, and the entire plant needs to be remodeled and rebuilt, causing delays and costs that many companies are simply unwilling to bear. And humanoid robots like Dex promise to solve this dilemma, which is its biggest selling point. Notably, Dex doesn't use infrared technology like many traditional robots or robots working in blacklight factories, but rather a combination of sensors that use “real” vision (i.e. RGB and depth cameras).

Although DEX and Adam occupy an important position in the marketing of the RichTech Robotics website, the company also makes a variety of robots. The company's other industrial robot, Titan, is designed to assist humans (or robots like Dex) by transporting items within factories with many moving parts. This is similar to the warehousing robot used by Amazon (AMZN.US) in its warehouses, but Titan's ability to navigate complex and ever-changing paths where people are present may be transformative for many businesses. Titan's current deployment is very small; the company has deployed the Titan at a BMW dealership in Plano, Texas. The company has a promotional video about this deployment, calling it a “case study” on its website, but the video is only 2 minutes long.

The majority of Richtech Robotics' deployments so far seem to have been used for one-off corporate events. While this is good for exposure and investor interest, the company has yet to have a substantial impact on its profits through robot deployment. This is to be expected since the company is still in its early stages. Investors must be aware that the company has yet to reach a stage where it can claim a successful large-scale deployment.

The quintessential innovative enterprise

Like many innovative companies, Richtech Robotics manufactures and delivers new high-tech products/services, but is yet to make a profit. This combination often results in such companies' stock prices being on a roller coaster, as their valuations are largely based on future growth expectations and promises of profit rather than current profit growth.

Some financial data from Richtech Robotics prove that it is a quintessential innovative company. There was no increase in revenue, and operating expenses were high. The company is clearly unprofitable in the short term, which requires economies of scale — more robot-as-a-service deployments will allow for more depreciation and will improve profitability.

So where does the money to cover all of this spending come from? For current shareholders of Richtech Robotics, the answer may not be good. But for most companies, especially when their shares are being hyped up like Richtech Robotics, this is usually a worthwhile course of action: issuing additional shares.

Due to the ongoing need for capital, the company has been issuing shares to cover these costs. This was at the expense of the interests of existing shareholders, whose holdings were diluted by issuing new shares. Richtech Robotics' shares have more than tripled since January 2024.

Still, for innovative companies like Richtech Robotics, this is generally better than taking on debt. The company has very low debt and few long-term debts, mostly for its new Nevada facility. The company has a very low debt-to-asset ratio, which means it may be able to keep the company running for a long time. The company has also been working to reduce its overall debt, from $4 million to less than half of what it is today.

Adequate cash reserves are critical to the survival of these innovative companies, and they need to stay in the market longer than their competitors and for as long as possible in order to reap the rewards of their huge investment in R&D. However, research and development takes time, and many speculative companies such as robotics companies are unable to support a return.

Investors should be able to expect to see this kind of R&D expenditure, but it is important to keep a close eye on the level of their cash reserves when profits are not yet realized. According to Richtech Robotics' latest 10-Q statement, it can be estimated that its cash and equivalents are about US$32.893 million, its short-term investment is about US$52.616 million, and its cumulative core liquidity is approximately US$85.5 million. The total annualized operating expenses are US$14.9 million, which is estimated based on operating expenses of US$11.97 million over the last nine months.

Based on these current figures, Richtech Robotics has the cash to cover its operating expenses for more than two years, and five years if short-term investments are added. Of course, this may change over time, as companies at this stage generally don't have stable expenses or revenue. However, the current data paints a good picture. Few companies of this size have four years of core operating expenses on hand, and even fewer have such a low balance ratio.

summed

It's always difficult to rate Richtech Robotics, an innovative company that hasn't yet been profitable, because the real forces driving the stock right now are market narratives and technology rather than fundamentals. However, the future of Richtech Robotics is promising, both for the company itself and for the government — the Trump administration's potential policy rollout could benefit the robotics market, which in turn will benefit the company.

But for now, almost all of this remains a phase of hype and hopeful expectations. Richtech Robotics' current stock price is already too high, especially considering that the recent rise is mainly based on rumors and expectations for future government action. In the absence of any details about the action, its share price increase was mainly due to hype.

This can be very powerful, but it can also cause significant losses. Richtech Robotics' past stock price trends clearly indicate this. Even if investors correctly judge that Richtech Robotics will become more profitable over time, they are at risk of further dilution of the stock, which could cause the stock to depreciate.

Investors are now buying Richtech Robotics, betting that it will be profitable in the future, and that its products will be useful to America's re-industrialization efforts. This is definitely a gamble, and the results can be very bad. Richtech Robotics still has a long way to go, and investors should keep watching.