If any person 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 year.
The company has long been a key beneficiary of the present trend for both EV manufacturers as well as growth stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, why he thinks Nio is going to 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 solution to an in house autonomous driving (AD) answer based on Nvidia architecture. A solid state battery for the following new model – an ET7 sedan – offering 150kwh capacity or perhaps range of over 1,000km, and the commercialization of LiDar to provide super-sensing capability on ET7.
Many intriguing of all the, nonetheless, may be the first of content monetization? e.g. Ad as a service.
Lai thinks this opens up a complete new world of monetization choices for automobile makers and also suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be able to view a complete AD service for Rmb680 a month.
Assuming 5 7 yrs of usage, Lai says, Cumulative transaction would be similar or higher than the one-time AD option payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in other services or products.
The analyst’s awareness evaluation suggests some content revenue could increase rapidly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Appropriately, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the cost target up from fifty dolars to a neighborhood high of seventy five dolars. Investors may be pocketing profits of eighteen %, ought to Lai’s thesis play out over the coming months. (to be able to view Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, however, its present valuation provides a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and four Holds. But, the share gains keep coming in dense and fast, and the $52.28 typical priced target now suggests shares will decline by ~19 % with the following twelve months.