In case anyone 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 % since the turn of year.
The company has been a key 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 four strategic milestones, the reason he feels Nio is going to continue to swap a lot more like a fast growth technology/EV stock compared to a carmaker.
These include the pivot out 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 following brand 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 intriguing of all the, nonetheless, will be the first of content monetization? e.g. Advertisement as a service.
Lai believes this opens up a complete brand new world of monetization choices for automobile makers and also suggests future cars will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be ready to get into a full 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 choice payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in other products or services.
The analyst’s sensitivity analysis indicates some content revenue could increase rapidly 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 price goal up from fifty dolars to a neighborhood high of seventy five dolars. Investors will be able to be pocketing profits of eighteen %, really should Lai’s thesis play out with the coming months. (In order to watch Lai’s track record, click here)
Nio has decent support amongst Lai’s colleagues, but its present valuation offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and 4 Holds. Nevertheless, the share gains keep coming in dense and fast, as well as the $52.28 usual priced target now indicates shares will drop by ~19 % with the following twelve months.