If any person was under the impression electric-powered automobile 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 present trend for both EV makers and growth stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, the reason he feels Nio is going to continue to exchange more like a fast growth technology/EV inventory compared to a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 answer 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 – boasting 150kwh capacity or range of around 1,000km, as well as the commercialization of LiDar to give super-sensing capability on ET7.
The majority of fascinating of the, nonetheless, will be the beginning of articles monetization? e.g. Advertisement as a service.
Lai believes this opens up a complete new world of monetization choices for automobile manufacturers and suggests succeeding cars will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be ready to view a total AD service for Rmb680 a month.
Assuming 5-7 years of usage, Lai states, Cumulative payment will be similar or higher than the one time AD choice payment at Xpeng or Tesla.
Down the road, Lai expects Nio will ramp up content monetization revenue in different products or services.
The analyst’s awareness analysis suggests some content revenue could possibly 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 retail price target up from fifty dolars to a street high of seventy five dolars. Investors could be pocketing profits of 18 %, ought to Lai’s thesis play through with the coming months. (In order to view Lai’s track record, click here)
Nio has good support amongst Lai’s colleagues, although its current valuation offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and four Holds. However, the share gains keep coming in thick and fast, and also the $52.28 average price target today indicates shares will decline by ~19 % with the following twelve months.