In case any person was under the impression electric 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 now up by thirty one % after the turn of season.
The company has long been a key beneficiary of the present trend for both EV makers and development stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly why he thinks Nio is going to continue to swap 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 next brand new model – an ET7 sedan – boasting 150kwh capacity or maybe range of more than 1,000km, as well as the commercialization of LiDar to provide super sensing capability on ET7.
Many fascinating of all the, nevertheless, would be the first of content monetization? e.g. Advertisement as a service.
Lai believes this opens up a whole brand new world of monetization possibilities for automobile manufacturers and suggests succeeding cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be in a position to get into a complete 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 option payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in various products or services.
The analyst’s awareness evaluation suggests some content revenue could possibly increase quickly 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 target up from fifty dolars to a neighborhood high of $75. Investors could be pocketing gains of 18 %, should Lai’s thesis play out over the coming months. (to be able to view Lai’s track record, click here)
Nio has good assistance amongst Lai’s colleagues, but the current valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and four Holds. But, 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 following 12 months.