In case 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 now up by thirty one % since the turn of season.
The company continues to be a prime beneficiary of the present trend for both EV manufacturers and growth stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, exactly the reason he believes Nio will continue to swap more like a fast-growth technology/EV inventory than a carmaker.
These include the pivot out from the existing products’ Mobileye EQ4 solution 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 – offering 150kwh capacity or maybe range of around 1,000km, along with the commercialization of LiDar to deliver super-sensing capability on ET7.
The majority of fascinating of all the, nevertheless, may be the first of content monetization? e.g. Ad as a service.
Lai feels this opens up a complete new world of monetization possibilities for automobile manufacturers and also suggests future cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be ready to access a full AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai says, Cumulative payment will be higher or similar compared to the one time AD choice payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s sensitivity evaluation indicates some content revenue might 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 price goal up from fifty dolars to a street high of seventy five dolars. Investors could be pocketing profits of eighteen %, should Lai’s thesis play through with the coming months. (to be able to watch Lai’s track record, click here)
Nio has good support amidst Lai’s colleagues, however, the current 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, and the $52.28 average price target today indicates shares will drop by ~19 % over the next 12 months.