If any person 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 % since the turn of season.
The company has been a major beneficiary of the present trend for both EV manufacturers and growth stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, the reason he thinks Nio is going to continue to exchange a lot more like a fast-growth technology/EV stock 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 – offering 150kwh capacity or maybe range of more than 1,000km, and the commercialization of LiDar to give 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 brand new world of monetization choices for car makers and suggests future automobiles will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to access a full AD service for Rmb680 a month.
Assuming 5 7 yrs of use, Lai says, Cumulative payment will be similar or higher compared to the one time AD option payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in various services or products.
The analyst’s awareness evaluation suggests some content revenue could 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 price objective up from fifty dolars to a street high of seventy five dolars. Investors could be pocketing gains of 18 %, really should Lai’s thesis play out over the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent support amongst Lai’s colleagues, however, its current valuation offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and 4 Holds. However, the share gains keep coming in heavy and fast, as well as the $52.28 average price target now suggests shares will drop by ~19 % with the next 12 months.