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 % since the turn of year.
The company has long 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 counts 4 strategic milestones, why he thinks Nio will continue to exchange more like a fast growth technology/EV stock than a carmaker.
These include the pivot away from the existing products’ Mobileye EQ4 answer to an in-house autonomous driving (AD) answer based on Nvidia architecture. A solid-state battery for the next new model – an ET7 sedan – boasting 150kwh capacity or range of more than 1,000km, as well as the commercialization of LiDar to deliver super-sensing capability on ET7.
Many intriguing of the, nonetheless, will be the beginning of articles monetization? e.g. Ad as a service.
Lai thinks this opens up a complete brand new world of monetization possibilities for automobile makers and suggests succeeding cars will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be able to view a total AD service for Rmb680 a month.
Assuming 5 7 years of use, Lai states, Cumulative transaction would be similar or higher compared to the one time AD option payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s sensitivity analysis indicates some content revenue could possibly increase quickly 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 retail price objective up from fifty dolars to a street high of seventy five dolars. Investors will be able to be pocketing gains of 18 %, ought to Lai’s thesis play out with the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, although its present valuation offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. But, the share gains keep coming in heavy and fast, and the $52.28 usual priced target now indicates shares will drop by ~19 % over the following 12 months.