In case 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 already up by thirty one % since the turn of year.
The company continues to be a major beneficiary of the current trend for both EV manufacturers as well as growth stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, exactly the reason he believes Nio will continue to exchange a lot more like a fast-growth technology/EV stock compared to 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 range of more than 1,000km, along with the commercialization of LiDar to give super-sensing capability on ET7.
Most intriguing of the, nonetheless, will be the first of articles monetization? e.g. Advertisement as a service.
Lai believes this opens up a whole brand new world of monetization possibilities for automobile makers and also suggests future cars will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be able to get into a total AD service for Rmb680 a month.
Assuming 5 7 years of usage, Lai says, Cumulative payment would be similar or higher compared to the one time AD choice payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in various goods and services.
The analyst’s sensitivity evaluation indicates some content revenue might increase rapidly from 2022, implying accretion of equity present value of ~US$21 35/shr.
Appropriately, Lai reiterates a heavy (i.e. Buy) rating on NIO shares and bumped the retail price objective up from $50 to a block high of $75. Investors could be pocketing profits of eighteen %, should Lai’s thesis play through with the coming months. (In order to view Lai’s track record, click here)
Nio has good support amongst Lai’s colleagues, but the present valuation of its provides a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and 4 Holds. Nevertheless, the share gains keep coming in dense and fast, and also the $52.28 average priced target today indicates shares will drop by ~19 % with the following twelve months.