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 thirty one % after the turn of year.
The company continues to be a prime beneficiary of the current trend for both EV manufacturers as well as growth stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he believes Nio is going to continue to swap a lot more like a fast growth technology/EV inventory 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) answer based on Nvidia architecture. A solid-state battery for the next new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of over 1,000km, along with the commercialization of LiDar to provide super sensing capability on ET7.
Many fascinating of all, nonetheless, would be the beginning of content monetization? e.g. Ad as a service.
Lai thinks this opens up a complete new world of monetization possibilities for car manufacturers and suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be ready to access a total AD service for Rmb680 a month.
Assuming 5-7 yrs of use, Lai states, Cumulative transaction would be higher or similar than the one time AD choice payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in different products or services.
The analyst’s sensitivity analysis suggests such content revenue could possibly increase rapidly from 2022, implying accretion of equity present value of ~US$21 35/shr.
Appropriately, Lai reiterates a heavy (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 gains of eighteen %, really should Lai’s thesis play through with the coming months. (In order to view Lai’s track record, click here)
Nio has good support amidst Lai’s colleagues, though its present valuation offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and four Holds. Nonetheless, the share gains keep coming in thick and fast, as well as the $52.28 usual priced target now indicates shares will decline by ~19 % over the following twelve months.