If anyone was under the impression electric 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 now up by 31 % since the turn of year.
The company has long been a major beneficiary of the current trend for both EV manufacturers as well as growth stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he thinks Nio will continue to exchange a lot more like a fast growth technology/EV inventory compared to a carmaker.
These include the pivot away 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 new model – an ET7 sedan – offering 150kwh capacity or maybe range of around 1,000km, along with the commercialization of LiDar to provide super sensing capability on ET7.
The majority of intriguing of all the, nevertheless, would be the beginning of articles monetization? e.g. Ad as a service.
Lai believes this opens up a whole brand new world of monetization options for automobile manufacturers and suggests succeeding cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be ready to access a full AD service for Rmb680 a month.
Assuming 5-7 yrs of use, Lai says, Cumulative transaction would be higher or similar 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 goods and services.
The analyst’s awareness evaluation suggests some content revenue could possibly increase quickly 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 $50 to a street high of $75. Investors may 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 assistance amidst Lai’s colleagues, however, the current valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and four Holds. Nonetheless, the share gains keep coming in dense and fast, and the $52.28 usual priced target today suggests shares will decline by ~19 % with the next twelve months.