If anybody was under the impression electric 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 now up by thirty one % since the turn of season.
The company has long been a major beneficiary of the current trend for both EV makers as well as development stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, why he thinks Nio is going to continue to trade a lot more like a fast growth technology/EV inventory than 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 brand new model – an ET7 sedan – offering 150kwh capacity or range of around 1,000km, along with the commercialization of LiDar to deliver super sensing capability on ET7.
Most fascinating of all the, however, may be the first of articles monetization? e.g. Advertisement as a service.
Lai feels this opens up a whole new world of monetization possibilities for car manufacturers and also suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be in a position to access a total AD service for Rmb680 a month.
Assuming 5 7 yrs of use, Lai says, Cumulative payment will be similar or higher compared to the one-time AD choice payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in various products or services.
The analyst’s sensitivity analysis indicates such content revenue might 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 purchase price goal up from fifty dolars to a neighborhood high of $75. Investors will be able to be pocketing gains of 18 %, ought to Lai’s thesis play out with the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, though its present valuation provides a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and four Holds. Nevertheless, the share gains keep coming in heavy and fast, and also the $52.28 typical priced target today indicates shares will drop by ~19 % with the following twelve months.