If anybody 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 % since the turn of season.
The company has been a major beneficiary of the present trend for both EV manufacturers and development stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, why he thinks Nio is going to continue to trade more like a fast growth technology/EV stock than a carmaker.
These include the pivot away from the existing products’ Mobileye EQ4 resolution to an in-house autonomous driving (AD) answer based on Nvidia architecture. A solid state battery for the following new model – an ET7 sedan – boasting 150kwh capacity or range of over 1,000km, and the commercialization of LiDar to provide super sensing capability on ET7.
The majority of intriguing of all, nonetheless, will be the first of content monetization? e.g. Ad as a service.
Lai feels this opens up a whole brand new world of monetization choices for automobile makers and also suggests succeeding cars will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be in a position to view a complete AD service for Rmb680 a month.
Assuming 5 7 yrs of usage, Lai says, Cumulative transaction would be similar or higher than the one-time AD option payment at Xpeng or Tesla.
Down the road, Lai expects Nio will ramp up content monetization revenue in various products or services.
The analyst’s sensitivity analysis indicates some content revenue might increase quickly from 2022, implying accretion of equity present value of ~US$21 35/shr.
Accordingly, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the purchase price goal up from fifty dolars to a street high of $75. Investors will be able to be pocketing gains of 18 %, really should Lai’s thesis play out over the coming months. (To view Lai’s track record, click here)
Nio has decent support amongst Lai’s colleagues, though its present valuation presents a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. Nevertheless, the share gains keep coming in dense and fast, and the $52.28 typical priced target today suggests shares will decline by ~19 % with the following twelve months.