In case anybody was under the impression electric 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 % since the turn of year.
The company has been a major beneficiary of the current trend for both EV makers and development stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, why he believes Nio is going to continue to swap 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 next new model – an ET7 sedan – offering 150kwh capacity or perhaps range of over 1,000km, along with the commercialization of LiDar to give super sensing capability on ET7.
The majority of intriguing of all, however, would be the first of articles monetization? e.g. Advertisement as a service.
Lai thinks this opens up a whole new world of monetization possibilities for car makers and also suggests future cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be ready to view a total AD service for Rmb680 a month.
Assuming 5 7 years of use, Lai states, Cumulative payment 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 various products or services.
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.
Accordingly, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the purchase price objective up from $50 to a neighborhood high of $75. Investors could be pocketing profits of eighteen %, ought to Lai’s thesis play through over the coming months. (to be able to view Lai’s track record, click here)
Nio has good assistance amidst Lai’s colleagues, though its present valuation presents a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and four Holds. However, the share gains keep coming in heavy and fast, as well as the $52.28 average priced target today indicates shares will drop by ~19 % with the next 12 months.