In case any person 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 31 % since the turn of year.
The company continues to be a major beneficiary of the current trend for both EV manufacturers as well as development stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, exactly the reason he thinks Nio will continue to trade a lot more like a fast growth technology/EV stock compared to a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 answer 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 perhaps range of more than 1,000km, and the commercialization of LiDar to provide super sensing capability on ET7.
Many intriguing of all, nonetheless, would be the beginning of content monetization? e.g. Advertisement as a service.
Lai thinks this opens up a complete new world of monetization possibilities for car makers and also suggests future cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to access a full AD service for Rmb680 a month.
Assuming 5 7 yrs of usage, Lai says, Cumulative payment will be higher or similar than the one-time AD choice payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in various services or products.
The analyst’s awareness evaluation suggests such 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 retail price objective up from fifty dolars to a neighborhood high of seventy five dolars. Investors could be pocketing gains of 18 %, really should Lai’s thesis play out with the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, but its present valuation offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and four Holds. However, the share gains keep coming in thick and fast, and the $52.28 typical priced target today suggests shares will decline by ~19 % over the next 12 months.