If any person was under the impression electric-powered vehicle 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 now up by thirty one % after the turn of season.
The company continues to be a prime beneficiary of the present trend for both EV manufacturers as well as growth stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, the reason he feels Nio will continue to trade a lot more like a fast-growth technology/EV stock than a carmaker.
These include the pivot out 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 new model – an ET7 sedan – offering 150kwh capacity or perhaps range of over 1,000km, and the commercialization of LiDar to provide super sensing capability on ET7.
Most intriguing of all, nevertheless, will be the first of content monetization? e.g. Advertisement as a service.
Lai feels this opens up a whole brand new world of monetization choices for automobile makers and also suggests future automobiles will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be able to access a full AD service for Rmb680 a month.
Assuming 5 7 years of usage, Lai states, 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 other goods and services.
The analyst’s sensitivity evaluation indicates such content revenue could increase quickly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Accordingly, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the purchase price goal up from fifty dolars to a neighborhood high of seventy five dolars. Investors could be pocketing profits of 18 %, ought to Lai’s thesis play out with the coming months. (To watch Lai’s track record, click here)
Nio has good support amidst Lai’s colleagues, though its present valuation presents a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and 4 Holds. But, the share gains keep coming in heavy and fast, as well as the $52.28 typical price target today suggests shares will decline by ~19 % with the next twelve months.