In case anyone was under the impression electric-powered vehicle 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 season.
The company has been a prime beneficiary of the present trend for both EV manufacturers as well as development stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, the reason he believes Nio will continue to trade a lot more like a fast growth technology/EV stock than 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 following brand new model – an ET7 sedan – offering 150kwh capacity or maybe range of over 1,000km, and the commercialization of LiDar to provide super-sensing capability on ET7.
Most fascinating of all the, nonetheless, may be the beginning of articles monetization? e.g. Ad as a service.
Lai thinks this opens up a whole brand new world of monetization choices 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 access a total AD service for Rmb680 a month.
Assuming 5 7 years of usage, Lai states, Cumulative payment would be higher or similar compared to the one time AD choice payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in various products or services.
The analyst’s sensitivity evaluation indicates such 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 $75. Investors could be pocketing profits of eighteen %, should Lai’s thesis play out with the coming months. (to be able to view Lai’s track record, click here)
Nio has decent assistance amidst Lai’s colleagues, though its current valuation provides a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. Nonetheless, the share gains keep coming in heavy and fast, and also the $52.28 usual price target now indicates shares will drop by ~19 % with the next 12 months.