In case anybody 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 thirty one % after the turn of year.
The company has been a prime beneficiary of the present trend for both EV makers 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 is going to continue to swap a lot more like a fast growth technology/EV stock compared to a carmaker.
These include the pivot away from the existing products’ Mobileye EQ4 answer 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 maybe range of over 1,000km, as well as the commercialization of LiDar to give super-sensing capability on ET7.
Most fascinating of all, nevertheless, may be the first of articles monetization? e.g. Ad as a service.
Lai thinks this opens up a complete brand new world of monetization choices for automobile manufacturers and suggests future automobiles will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be ready to get into a total AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai states, Cumulative payment will be similar or higher 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 goods and services.
The analyst’s awareness analysis suggests some content revenue could increase quickly 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 cost target up from fifty dolars to a block high of $75. Investors may be pocketing profits of eighteen %, ought to Lai’s thesis play out with the coming months. (to be able to view Lai’s track record, click here)
Nio has decent support amongst Lai’s colleagues, however, the current 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 dense and fast, as well as the $52.28 typical priced target today indicates shares will drop by ~19 % with the next twelve months.