In case any person was under the impression electric-powered 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 already up by thirty one % after the turn of year.
The company has been a major beneficiary of the current trend for both EV makers and development stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, exactly why he believes Nio will continue to swap more like a fast-growth technology/EV inventory compared to a carmaker.
These include the pivot out from the existing products’ Mobileye EQ4 resolution to an in house autonomous driving (AD) solution based on Nvidia architecture. A solid-state battery for the following new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of over 1,000km, and the commercialization of LiDar to deliver super-sensing capability on ET7.
Many fascinating of the, nevertheless, would be the beginning of content monetization? e.g. Ad as a service.
Lai feels this opens up a complete brand new world of monetization choices for automobile makers and also suggests future automobiles will be as smartphones with wheels.
For Nio’s next design, 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 says, Cumulative transaction will be higher or similar compared to the one time AD option payment at Xpeng or Tesla.
Down the road, Lai expects Nio will ramp up content monetization revenue in other products or services.
The analyst’s sensitivity evaluation indicates some content revenue could possibly increase quickly 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 purchase price target up from fifty dolars to a street high of $75. Investors may be pocketing profits of 18 %, really should Lai’s thesis play through with the coming months. (To watch Lai’s track record, click here)
Nio has decent support amongst Lai’s colleagues, but the current valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and 4 Holds. Nevertheless, the share gains keep coming in dense and fast, and also the $52.28 usual price target today suggests shares will decline by ~19 % with the next twelve months.