In case anybody was under the impression electric 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 thirty one % after the turn of season.
The company has been a prime beneficiary of the present trend for both EV makers as well as growth stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, why he believes Nio will continue to swap a lot more like a fast-growth technology/EV inventory compared to a carmaker.
These include the pivot at a distance 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 next new model – an ET7 sedan – boasting 150kwh capacity or range of more than 1,000km, as well as the commercialization of LiDar to give super sensing capability on ET7.
Most fascinating of the, nonetheless, may be the beginning of content monetization? e.g. Advertisement as a service.
Lai believes this opens up a complete brand new world of monetization options for automobile makers and also suggests future cars will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be able to get into a full AD service for Rmb680 a month.
Assuming 5-7 yrs of usage, Lai states, Cumulative payment would be similar or higher compared to the one time AD option payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in other services or products.
The analyst’s awareness evaluation indicates such content revenue might 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 street high of $75. Investors will be able to be pocketing profits of eighteen %, ought to Lai’s thesis play through with the coming months. (In order to view Lai’s track record, click here)
Nio has good assistance amidst Lai’s colleagues, but the present valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and 4 Holds. Nonetheless, the share gains keep coming in thick and fast, and also the $52.28 typical price target today suggests shares will decline by ~19 % over the next 12 months.