If anybody was under the impression electric-powered car 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 31 % after the turn of season.
The company has long been a prime beneficiary of the current trend for both EV makers and development stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, exactly the reason he feels Nio will continue to exchange 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) solution based on Nvidia architecture. A solid-state battery for the following new model – an ET7 sedan – boasting 150kwh capacity or maybe range of over 1,000km, as well as the commercialization of LiDar to give super-sensing capability on ET7.
The majority of fascinating of all, however, will be the beginning of articles monetization? e.g. Advertisement as a service.
Lai thinks this opens up a complete new world of monetization choices for car makers and suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be ready to get into a total AD service for Rmb680 a month.
Assuming 5-7 yrs of usage, Lai says, Cumulative payment 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 various services or products.
The analyst’s sensitivity evaluation indicates such content revenue might 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 objective up from $50 to a block high of seventy five dolars. Investors could be pocketing profits of eighteen %, should Lai’s thesis play through over the coming months. (In order to watch Lai’s track record, click here)
Nio has good assistance amidst Lai’s colleagues, although its current valuation offers a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and 4 Holds. Nonetheless, the share gains keep coming in thick and fast, and also the $52.28 usual priced target now indicates shares will decline by ~19 % over the following twelve months.