In case anyone 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 now up by thirty one % after the turn of season.
The company continues to be a key beneficiary of the present trend for both EV makers and growth stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, the reason he feels Nio is going to continue to exchange a lot more like a fast-growth technology/EV inventory than a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 solution to an in-house autonomous driving (AD) solution based on Nvidia architecture. A solid-state battery for the next new model – an ET7 sedan – boasting 150kwh capacity or range of around 1,000km, as well as the commercialization of LiDar to give super-sensing capability on ET7.
Many intriguing of all the, nevertheless, may be the first of content monetization? e.g. Ad as a service.
Lai believes this opens up a whole new world of monetization options for automobile manufacturers and suggests future cars will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be ready to access a complete AD service for Rmb680 a month.
Assuming 5 7 yrs of use, Lai states, Cumulative payment will be higher or similar than the one-time AD option payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in various services or products.
The analyst’s awareness analysis indicates some content revenue could 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 $50 to a neighborhood high of seventy five dolars. Investors may be pocketing gains of 18 %, really should Lai’s thesis play through over the coming months. (In order to watch Lai’s track record, click here)
Nio has decent assistance amidst Lai’s colleagues, however, its present valuation offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and four Holds. But, the share gains keep coming in heavy and fast, and the $52.28 average price target now suggests shares will decline by ~19 % with the next twelve months.