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 already up by thirty one % after the turn of year.
The company has long been a key beneficiary of the current trend for both EV manufacturers as well as growth stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he believes Nio is going to continue to swap a lot more like a fast-growth technology/EV stock than a carmaker.
These include the pivot out 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 new model – an ET7 sedan – offering 150kwh capacity or range of around 1,000km, along with the commercialization of LiDar to deliver super sensing capability on ET7.
The majority of fascinating of all the, however, may be the first of content monetization? e.g. Ad as a service.
Lai feels this opens up a whole brand new world of monetization possibilities for car makers and also suggests future cars will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be in a position to get into a total AD service for Rmb680 a month.
Assuming 5-7 yrs of use, 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 different services or products.
The analyst’s awareness evaluation suggests such content revenue could 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 target up from $50 to a block high of seventy five dolars. Investors will be able to be pocketing profits of 18 %, ought to Lai’s thesis play out with the coming months. (In order to view Lai’s track record, click here)
Nio has good support amidst Lai’s colleagues, though the current valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. Nonetheless, the share gains keep coming in heavy and fast, and also the $52.28 typical priced target today indicates shares will drop by ~19 % over the next twelve months.