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 % since the turn of year.
The company has been a prime beneficiary of the present trend for both EV makers and growth stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, the reason he feels Nio is going to continue to exchange 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) solution based on Nvidia architecture. A solid state battery for the following brand new model – an ET7 sedan – offering 150kwh capacity or range of around 1,000km, as well as the commercialization of LiDar to provide super-sensing capability on ET7.
The majority of intriguing of all the, nevertheless, will be the beginning of articles monetization? e.g. Advertisement as a service.
Lai thinks this opens up a whole new world of monetization choices for car manufacturers and also suggests future cars will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to access a total AD service for Rmb680 a month.
Assuming 5 7 years of usage, Lai says, Cumulative transaction will 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 services or products.
The analyst’s awareness evaluation suggests such 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 retail price goal up from fifty dolars to a block high of seventy five dolars. Investors may be pocketing profits of eighteen %, should Lai’s thesis play out with the coming months. (To watch Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, but the present valuation of its provides a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and 4 Holds. However, the share gains keep coming in heavy and fast, and also the $52.28 average priced target now suggests shares will decline by ~19 % over the next 12 months.