If anybody was under the impression electric-powered automobile 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 31 % after the turn of season.
The company has been a prime beneficiary of the present trend for both EV manufacturers as well as 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 exchange more like a fast growth technology/EV stock compared to a carmaker.
These include the pivot at a distance 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 – offering 150kwh capacity or maybe range of over 1,000km, as well as the commercialization of LiDar to provide super-sensing capability on ET7.
The majority of intriguing of all, however, will be the first of content monetization? e.g. Ad as a service.
Lai thinks this opens up a complete new world of monetization possibilities for automobile makers and suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to view a complete AD service for Rmb680 a month.
Assuming 5 7 yrs of usage, Lai states, Cumulative payment would be similar or higher compared to the one time AD choice payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s sensitivity analysis indicates some content revenue could possibly 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 goal up from fifty dolars to a street high of $75. Investors will be able to be pocketing profits of eighteen %, really should Lai’s thesis play out with the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, however, the present valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and four Holds. Nonetheless, the share gains keep coming in heavy and fast, and the $52.28 usual priced target now indicates shares will drop by ~19 % with the next twelve months.