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 already up by thirty one % after the turn of year.
The company has long been a major beneficiary of the present trend for both EV makers as well as development stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, the reason he believes Nio is going to continue to trade a lot more like a fast-growth technology/EV stock compared to a carmaker.
These include the pivot at a distance 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 brand new model – an ET7 sedan – offering 150kwh capacity or range of over 1,000km, and the commercialization of LiDar to give super sensing capability on ET7.
Many fascinating of the, nonetheless, may be the beginning of articles monetization? e.g. Ad as a service.
Lai feels this opens up a whole new world of monetization choices for car manufacturers and also suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be in a position to access a complete AD service for Rmb680 a month.
Assuming 5 7 years of use, Lai says, Cumulative transaction will be similar or higher than the one time AD option payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in different services or products.
The analyst’s awareness analysis suggests such content revenue might 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 cost target up from $50 to a neighborhood high of $75. Investors may 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 assistance amongst Lai’s colleagues, but its current 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, and also the $52.28 typical priced target now suggests shares will decline by ~19 % over the next 12 months.