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 31 % since the turn of year.
The company continues to be a major 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 matters 4 strategic milestones, why he believes Nio is going to continue to trade 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 brand new model – an ET7 sedan – offering 150kwh capacity or range of around 1,000km, as well as the commercialization of LiDar to deliver super-sensing capability on ET7.
The majority of fascinating of the, however, will be the first of articles monetization? e.g. Advertisement as a service.
Lai believes this opens up a complete brand new world of monetization possibilities for car makers and suggests future automobiles will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be in a position to get into a full AD service for Rmb680 a month.
Assuming 5 7 years of use, Lai states, Cumulative payment would be higher or similar than the one-time AD option payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in other products or services.
The analyst’s awareness analysis indicates such content revenue could 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 goal up from $50 to a neighborhood high of $75. Investors will be able to be pocketing profits of 18 %, should Lai’s thesis play through with the coming months. (to be able to view Lai’s track record, click here)
Nio has good assistance amongst Lai’s colleagues, but its current valuation offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and four Holds. Nonetheless, the share gains keep coming in thick and fast, as well as the $52.28 usual priced target today suggests shares will decline by ~19 % over the following twelve months.