In case any person 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 thirty one % since the turn of year.
The company has long been a major beneficiary of the present trend for both EV makers and growth stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, exactly the reason he feels Nio will continue to exchange a lot more like a fast growth technology/EV inventory 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 new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of over 1,000km, as well as the commercialization of LiDar to deliver super-sensing capability on ET7.
Most intriguing of all the, however, will be the first of content monetization? e.g. Ad as a service.
Lai feels this opens up a complete brand new world of monetization choices for car manufacturers and suggests succeeding automobiles will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be ready to view a complete AD service for Rmb680 a month.
Assuming 5 7 yrs of use, Lai states, Cumulative transaction will be similar or higher than the one-time AD choice payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in various products or services.
The analyst’s awareness analysis indicates some content revenue could increase rapidly 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 cost target up from $50 to a neighborhood high of $75. Investors may be pocketing profits of eighteen %, ought to Lai’s thesis play through over the coming months. (In order to view Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, though the current valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and four Holds. Nonetheless, the share gains keep coming in heavy and fast, and also the $52.28 typical priced target now suggests shares will decline by ~19 % with the next 12 months.