In case anyone 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 % after the turn of season.
The company has been a prime beneficiary of the current trend for both EV makers and growth stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he feels Nio will continue to trade more like a fast-growth technology/EV stock than a carmaker.
These include the pivot away 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 next new model – an ET7 sedan – offering 150kwh capacity or perhaps range of more than 1,000km, as well as the commercialization of LiDar to provide super sensing capability on ET7.
Most fascinating of the, nonetheless, may be the beginning of articles monetization? e.g. Advertisement as a service.
Lai believes this opens up a complete new world of monetization possibilities for automobile makers 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 states, Cumulative transaction will be similar or higher than the one time AD choice payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in other products or services.
The analyst’s awareness evaluation suggests some content revenue could 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 objective up from fifty dolars to a street high of $75. Investors will be able to be pocketing profits of eighteen %, really should Lai’s thesis play out over the coming months. (In order to watch Lai’s track record, click here)
Nio has good assistance amidst Lai’s colleagues, however, its current valuation presents a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and 4 Holds. But, the share gains keep coming in thick and fast, and also the $52.28 typical price target today suggests shares will decline by ~19 % over the following 12 months.