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 already up by thirty one % since the turn of year.
The company has long been a major beneficiary of the current 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 will continue to exchange a lot more like a fast growth technology/EV stock compared to a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 solution to an in house autonomous driving (AD) solution based on Nvidia architecture. A solid-state battery for the following brand new model – an ET7 sedan – offering 150kwh capacity or perhaps range of more than 1,000km, along with the commercialization of LiDar to deliver super-sensing capability on ET7.
The majority of intriguing of the, nonetheless, may be the beginning of content monetization? e.g. Ad as a service.
Lai thinks this opens up a whole new world of monetization options for car manufacturers and also suggests succeeding automobiles will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be ready to view a complete AD service for Rmb680 a month.
Assuming 5 7 yrs of use, Lai states, Cumulative transaction would be similar or higher than the one-time AD choice payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in various goods and services.
The analyst’s awareness analysis indicates some content revenue could 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 price target up from $50 to a block high of $75. Investors may be pocketing gains of 18 %, ought to Lai’s thesis play out over the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, however, its present valuation presents 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, as well as the $52.28 usual priced target now indicates shares will decline by ~19 % over the next 12 months.