In case any person was under the impression electric-powered 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 31 % after the turn of season.
The company continues to be a major beneficiary of the current trend for both EV makers and development stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, exactly why he feels Nio will continue to swap more like a fast growth technology/EV inventory than a carmaker.
These include the pivot out 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 following new model – an ET7 sedan – offering 150kwh capacity or perhaps range of over 1,000km, along with the commercialization of LiDar to provide super-sensing capability on ET7.
Most fascinating of all, nonetheless, would be the beginning of content monetization? e.g. Advertisement as a service.
Lai feels this opens up a whole new world of monetization possibilities for car makers and suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be in a position to view a complete AD service for Rmb680 a month.
Assuming 5-7 yrs of usage, Lai states, Cumulative payment would be higher or similar than the one-time AD choice payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in various products or services.
The analyst’s awareness analysis 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 target up from fifty dolars to a street high of seventy five dolars. Investors will be able to be pocketing gains of 18 %, really should Lai’s thesis play through with the coming months. (In order to watch Lai’s track record, click here)
Nio has good assistance amidst Lai’s colleagues, however, the current valuation of its provides a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and 4 Holds. Nevertheless, the share gains keep coming in thick and fast, and also the $52.28 typical priced target now indicates shares will decline by ~19 % with the next 12 months.