In case any person 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 already up by thirty one % after the turn of season.
The company has long been a key beneficiary of the current trend for both EV makers as well as growth stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, the reason he believes Nio will continue to swap a lot more like a fast-growth technology/EV inventory compared to a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 resolution to an in house autonomous driving (AD) solution based on Nvidia architecture. A solid state battery for the next brand new model – an ET7 sedan – offering 150kwh capacity or maybe range of around 1,000km, as well as the commercialization of LiDar to deliver super sensing capability on ET7.
Many fascinating of all, however, 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 options for automobile manufacturers and also suggests succeeding automobiles will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be ready to view a complete AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai states, Cumulative payment will be higher or similar than the one-time AD option payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s sensitivity evaluation indicates such 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 price goal up from fifty dolars to a block high of seventy five dolars. Investors will be able to be pocketing gains of 18 %, ought to Lai’s thesis play out over the coming months. (to be able to view Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, though its current valuation offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and 4 Holds. Nevertheless, the share gains keep coming in heavy and fast, and the $52.28 typical price target now indicates shares will decline by ~19 % over the following twelve months.