If 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 already up by thirty one % after the turn of year.
The company continues to be a major beneficiary of the current trend for both EV manufacturers and growth stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, exactly why he feels Nio will continue to swap a lot more like a fast growth technology/EV inventory than a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 resolution 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 maybe range of more than 1,000km, as well as the commercialization of LiDar to deliver super sensing capability on ET7.
Many intriguing of the, nevertheless, may be the beginning of articles monetization? e.g. Advertisement as a service.
Lai feels this opens up a whole new world of monetization options for car manufacturers and suggests future automobiles will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be able to access a total AD service for Rmb680 a month.
Assuming 5 7 yrs of usage, Lai states, Cumulative transaction would be similar or higher compared to the one time AD choice payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in other products or services.
The analyst’s awareness evaluation suggests some content revenue might increase rapidly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Accordingly, Lai reiterates a heavy (i.e. Buy) rating on NIO shares and bumped the retail price objective up from $50 to a block high of seventy five dolars. Investors could be pocketing profits of 18 %, ought to Lai’s thesis play through with the coming months. (to be able to watch Lai’s track record, click here)
Nio has good assistance amidst Lai’s colleagues, although the present valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and four Holds. However, the share gains keep coming in thick and fast, and also the $52.28 average priced target now indicates shares will decline by ~19 % with the next 12 months.