In case any person 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 % since the turn of year.
The company has long been a key beneficiary of the current trend for both EV makers and development stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, why he feels Nio is going to continue to swap a lot more like a fast growth technology/EV inventory 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) solution based on Nvidia architecture. A solid state battery for the next new model – an ET7 sedan – boasting 150kwh capacity or maybe range of over 1,000km, as well as the commercialization of LiDar to provide super-sensing capability on ET7.
Most fascinating of all, nevertheless, may be the beginning of content monetization? e.g. Ad as a service.
Lai believes this opens up a whole brand new world of monetization options for automobile makers and also suggests succeeding cars will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be in a position to view a total AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai says, Cumulative payment would be similar or higher compared to the one time AD option payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in various products or services.
The analyst’s awareness analysis indicates some content revenue might increase quickly from 2022, implying accretion of equity present value of ~US$21 35/shr.
Accordingly, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the price goal up from fifty dolars to a street high of seventy five dolars. Investors may be pocketing gains of 18 %, should Lai’s thesis play through over the coming months. (to be able to watch Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, but the current valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and four Holds. However, the share gains keep coming in dense and fast, and the $52.28 typical price target today suggests shares will decline by ~19 % over the following twelve months.