In case anyone was under the impression electric-powered 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 % after the turn of year.
The company has long been a prime beneficiary of the present trend for both EV manufacturers as well as growth stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, exactly the reason he feels 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 answer to an in house autonomous driving (AD) answer based on Nvidia architecture. A solid-state battery for the next brand new model – an ET7 sedan – offering 150kwh capacity or range of more than 1,000km, as well as the commercialization of LiDar to provide super sensing capability on ET7.
The majority of intriguing of the, however, will be the first of articles monetization? e.g. Ad as a service.
Lai feels this opens up a complete brand new world of monetization options for car makers and also suggests succeeding cars will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be able to access a complete AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai states, Cumulative transaction would be similar or higher compared to the one time AD option payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in various goods and services.
The analyst’s awareness analysis indicates some content revenue could possibly 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 target up from fifty dolars to a neighborhood high of seventy five dolars. Investors will be able to be pocketing gains of 18 %, ought to Lai’s thesis play through over the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, but the current valuation of its provides a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. But, the share gains keep coming in thick and fast, and also the $52.28 typical price target now suggests shares will drop by ~19 % over the following twelve months.
