If 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 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 development 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 a lot 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) answer based on Nvidia architecture. A solid-state battery for the next brand new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of more than 1,000km, and the commercialization of LiDar to give super-sensing capability on ET7.
Many fascinating of all the, nonetheless, may 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 automobiles will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be in a position to view a complete AD service for Rmb680 a month.
Assuming 5-7 yrs of usage, Lai says, Cumulative transaction will be similar or higher compared to the one-time AD option payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in other services or products.
The analyst’s sensitivity evaluation indicates such content revenue could possibly increase rapidly from 2022, implying accretion of equity present value of ~US$21 35/shr.
Accordingly, Lai reiterates a heavy (i.e. Buy) rating on NIO shares and bumped the price goal up from fifty dolars to a street high of $75. Investors could be pocketing profits of eighteen %, should Lai’s thesis play through over the coming months. (To view Lai’s track record, click here)
Nio has good assistance amidst Lai’s colleagues, but the current valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and four Holds. But, the share gains keep coming in dense and fast, and also the $52.28 typical priced target today suggests shares will drop by ~19 % over the next twelve months.