In case any person was under the impression electric-powered car 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 31 % after the turn of season.
The company has been a prime beneficiary of the current trend for both EV manufacturers as well as development stocks. Following 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 than a carmaker.
These include the pivot away 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 next new model – an ET7 sedan – offering 150kwh capacity or range of more than 1,000km, and the commercialization of LiDar to deliver super sensing capability on ET7.
The majority of fascinating of the, nevertheless, may be the first of content monetization? e.g. Advertisement as a service.
Lai believes this opens up a complete new world of monetization possibilities for automobile makers and suggests future cars will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be ready to access a full AD service for Rmb680 a month.
Assuming 5-7 yrs of usage, Lai states, Cumulative transaction will be higher or similar compared to the one-time AD option payment at Xpeng or Tesla.
Down the road, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s awareness evaluation indicates some content revenue could possibly increase rapidly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Appropriately, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the retail price objective up from $50 to a street high of $75. Investors will be able to be pocketing profits of 18 %, should Lai’s thesis play out over the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent support amongst Lai’s colleagues, although its current valuation offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and 4 Holds. Nonetheless, the share gains keep coming in thick and fast, and the $52.28 usual price target today indicates shares will drop by ~19 % with the following 12 months.