If anybody was under the impression electric 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 % since the turn of year.
The company continues to be a prime beneficiary of the current trend for both EV manufacturers as well as growth stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, the reason he feels Nio will continue to exchange a lot more like a fast-growth technology/EV inventory 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 brand new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of around 1,000km, and the commercialization of LiDar to provide super-sensing capability on ET7.
Many fascinating of the, however, would be the first of content monetization? e.g. Ad as a service.
Lai feels this opens up a complete brand new world of monetization choices for automobile manufacturers and suggests future automobiles will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to access a full AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai says, Cumulative transaction would be similar or higher than the one time AD choice payment at Xpeng or Tesla.
Down the road, Lai expects Nio will ramp up content monetization revenue in different products or services.
The analyst’s sensitivity evaluation indicates some content revenue could possibly increase quickly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Accordingly, Lai reiterates a heavy (i.e. Buy) rating on NIO shares and bumped the price target up from $50 to a street high of $75. Investors may be pocketing profits of 18 %, really should Lai’s thesis play through with the coming months. (In order to view Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, although the present valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. Nevertheless, the share gains keep coming in heavy and fast, and the $52.28 average price target today suggests shares will decline by ~19 % over the following twelve months.