In case any person 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 % since the turn of year.
The company has been a key beneficiary of the current trend for both EV makers as well as development stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly why he thinks Nio will continue to trade a lot more like a fast growth technology/EV inventory than a carmaker.
These include the pivot away from the existing products’ Mobileye EQ4 solution to an in house autonomous driving (AD) answer based on Nvidia architecture. A solid-state battery for the following new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of over 1,000km, as well as the commercialization of LiDar to give super-sensing capability on ET7.
The majority of fascinating of all, however, will be the first of content monetization? e.g. Ad as a service.
Lai feels this opens up a whole brand new world of monetization possibilities for car makers and also suggests succeeding cars will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be in a position to get into a complete AD service for Rmb680 a month.
Assuming 5 7 yrs of usage, Lai says, Cumulative transaction would be higher or similar than the one time AD option payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in different services or products.
The analyst’s awareness analysis indicates such 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 purchase price objective up from $50 to a block high of $75. Investors could be pocketing gains of eighteen %, ought to Lai’s thesis play out with the coming months. (to be able to watch Lai’s track record, click here)
Nio has good support amongst Lai’s colleagues, though the present valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and 4 Holds. Nonetheless, the share gains keep coming in heavy and fast, as well as the $52.28 usual price target today suggests shares will drop by ~19 % with the next 12 months.