If any person 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 now up by thirty one % after the turn of season.
The company continues to be a prime beneficiary of the present trend for both EV makers and growth stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he feels Nio is going to continue to trade more like a fast growth technology/EV stock compared to 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 around 1,000km, along with the commercialization of LiDar to deliver super sensing capability on ET7.
Many fascinating of all the, nonetheless, will be the first of articles monetization? e.g. Advertisement as a service.
Lai thinks this opens up a whole brand new world of monetization choices for car manufacturers and suggests future cars will be like 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 transaction would be higher or similar than 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 suggests some 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 purchase price target up from $50 to a block high of seventy five dolars. Investors could be pocketing profits of eighteen %, should Lai’s thesis play out over the coming months. (to be able to view Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, however, the current valuation of its provides a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and four Holds. But, the share gains keep coming in heavy and fast, and the $52.28 usual price target today suggests shares will decline by ~19 % over the next twelve months.