If anybody was under the impression electric-powered car 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 thirty one % since the turn of year.
The company has long been a prime beneficiary of the current trend for both EV makers and development stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, exactly why he believes Nio will continue to swap a lot more like a fast-growth technology/EV stock than a carmaker.
These include the pivot away 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 next brand new model – an ET7 sedan – offering 150kwh capacity or perhaps range of more than 1,000km, as well as the commercialization of LiDar to deliver super sensing capability on ET7.
Most fascinating of all the, nevertheless, will be the first of content monetization? e.g. Ad as a service.
Lai believes this opens up a whole brand new world of monetization choices for automobile makers and suggests succeeding cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to get into a full AD service for Rmb680 a month.
Assuming 5-7 yrs of use, Lai says, Cumulative transaction will be similar or higher than the one-time AD choice payment at Xpeng or Tesla.
Down the road, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s awareness analysis indicates some content revenue might increase quickly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Appropriately, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the price target up from $50 to a block high of $75. Investors could be pocketing profits of eighteen %, really should Lai’s thesis play through with the coming months. (In order to view Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, but the present valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and four Holds. However, the share gains keep coming in dense and fast, and the $52.28 typical priced target today indicates shares will decline by ~19 % over the following twelve months.