If anyone was under the impression electric vehicle 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 31 % since the turn of year.
The company has been a key beneficiary of the current trend for both EV makers as well as development stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, the reason he feels Nio will continue to swap a lot more like a fast-growth technology/EV inventory than a carmaker.
These include the pivot out 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 following brand new model – an ET7 sedan – boasting 150kwh capacity or range of around 1,000km, and the commercialization of LiDar to deliver super-sensing capability on ET7.
Most intriguing of all, nonetheless, may be the beginning of articles monetization? e.g. Ad as a service.
Lai feels this opens up a complete brand new world of monetization possibilities for car makers and suggests future cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to get into a total AD service for Rmb680 a month.
Assuming 5-7 yrs of use, Lai states, Cumulative payment would be similar or higher 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 goods and services.
The analyst’s awareness evaluation suggests some content revenue could possibly increase rapidly 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 fifty dolars to a block high of seventy five dolars. Investors will be able to be pocketing gains of 18 %, 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, but the current valuation of its provides a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and four Holds. Nonetheless, the share gains keep coming in heavy and fast, as well as the $52.28 typical price target now suggests shares will decline by ~19 % with the next 12 months.