In case anyone was under the impression electric 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 now up by 31 % after the turn of season.
The company has long been a major beneficiary of the current trend for both EV makers and development stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, exactly why he thinks Nio is going to continue to swap a lot more like a fast-growth technology/EV inventory compared to 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 new model – an ET7 sedan – offering 150kwh capacity or perhaps range of over 1,000km, and the commercialization of LiDar to give super-sensing capability on ET7.
Many intriguing of all, nevertheless, would be the beginning of content monetization? e.g. Ad as a service.
Lai believes 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 design, the ET7 sedan, owners are going to be able to access a total AD service for Rmb680 a month.
Assuming 5 7 years of use, 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 various services or products.
The analyst’s awareness evaluation indicates 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 retail price objective up from fifty dolars to a block high of seventy five dolars. Investors could be pocketing profits of eighteen %, should Lai’s thesis play out with the coming months. (to be able to watch Lai’s track record, click here)
Nio has good support amongst Lai’s colleagues, but the present valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and four Holds. Nonetheless, the share gains keep coming in thick and fast, and also the $52.28 average price target now suggests shares will drop by ~19 % with the following twelve months.