In case anybody 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 already up by 31 % since the turn of season.
The company has long been a key beneficiary of the present trend for both EV makers as well as growth stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, exactly why he believes Nio is going to continue to exchange more like a fast growth technology/EV inventory 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 – offering 150kwh capacity or range of over 1,000km, as well as 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. Ad as a service.
Lai feels this opens up a whole brand new world of monetization possibilities for automobile manufacturers and suggests future automobiles will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be able to get into a full AD service for Rmb680 a month.
Assuming 5 7 years of usage, Lai states, Cumulative transaction would be higher or similar than the one-time AD choice payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in different services or products.
The analyst’s awareness evaluation suggests some content revenue might increase rapidly from 2022, implying accretion of equity present value of ~US$21 35/shr.
Appropriately, Lai reiterates a heavy (i.e. Buy) rating on NIO shares and bumped the purchase price objective up from $50 to a block high of seventy five dolars. Investors will be able to be pocketing gains of 18 %, should Lai’s thesis play out with the coming months. (In order to view Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, though its present valuation offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and four Holds. But, the share gains keep coming in dense and fast, as well as the $52.28 typical price target now indicates shares will decline by ~19 % with the next twelve months.