In case anybody was under the impression electric automobile stocks would pause for a breather following 2020’s blistering rise, they forgot to hand Nio (NIO) the memo. The Chinese EV maker has seamlessly advanced into 2021, with shares already up by 31 % after the turn of year.
The company has been a key beneficiary of the current trend for both EV manufacturers as well as growth stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he thinks Nio is going to continue to trade more like a fast-growth technology/EV stock compared to a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 resolution to an in house autonomous driving (AD) solution based on Nvidia architecture. A solid-state battery for the following brand new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of over 1,000km, along with the commercialization of LiDar to provide super sensing capability on ET7.
The majority of intriguing of the, nevertheless, would be the first of content monetization? e.g. Ad as a service.
Lai thinks this opens up a whole brand new world of monetization possibilities for car manufacturers and also suggests succeeding cars will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be ready to access a total AD service for Rmb680 a month.
Assuming 5 7 years of use, Lai says, Cumulative transaction will be similar or higher than the one time AD choice payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in other services or products.
The analyst’s awareness analysis suggests such content revenue could possibly increase quickly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Appropriately, Lai reiterates a heavy (i.e. Buy) rating on NIO shares and bumped the purchase price target up from fifty dolars to a neighborhood high of $75. Investors will be able to be pocketing profits of 18 %, ought to Lai’s thesis play through over the coming months. (In order to view Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, although the current valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and four Holds. Nevertheless, the share gains keep coming in heavy and fast, and also the $52.28 usual price target now suggests shares will drop by ~19 % over the next twelve months.