If any person was under the impression electric-powered 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 thirty one % since the turn of year.
The company continues to be a major beneficiary of the present trend for both EV manufacturers and development stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, exactly why he thinks Nio will 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) answer based on Nvidia architecture. A solid state battery for the following brand new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of over 1,000km, and the commercialization of LiDar to deliver super-sensing capability on ET7.
Most intriguing of the, however, would be the first of content monetization? e.g. Advertisement as a service.
Lai believes this opens up a complete brand new world of monetization possibilities for automobile makers and suggests future automobiles 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 says, Cumulative payment will be higher or similar than the one-time AD choice payment at Xpeng or Tesla.
Down the road, Lai expects Nio will ramp up content monetization revenue in different products or services.
The analyst’s awareness analysis indicates some content revenue could possibly increase quickly 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 goal up from $50 to a block high of $75. Investors may be pocketing gains of eighteen %, ought to Lai’s thesis play through over the coming months. (To watch Lai’s track record, click here)
Nio has decent assistance amidst Lai’s colleagues, although the present valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. Nonetheless, the share gains keep coming in thick and fast, as well as the $52.28 typical price target now suggests shares will decline by ~19 % with the next 12 months.