In case any person 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 now up by 31 % after the turn of year.
The company continues to be a major beneficiary of the present trend for both EV makers and growth stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, exactly 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 away from the existing products’ Mobileye EQ4 solution to an in house autonomous driving (AD) answer based on Nvidia architecture. A solid state battery for the next new model – an ET7 sedan – offering 150kwh capacity or maybe range of over 1,000km, along with the commercialization of LiDar to provide super-sensing capability on ET7.
The majority of intriguing of all the, nonetheless, may be the first of content monetization? e.g. Ad as a service.
Lai thinks this opens up a whole new world of monetization choices for automobile makers and also suggests succeeding cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be able to view a complete AD service for Rmb680 a month.
Assuming 5-7 yrs of use, Lai states, Cumulative transaction 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 awareness analysis suggests such content revenue could increase rapidly 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 target up from fifty dolars to a street high of $75. Investors may be pocketing profits of 18 %, should Lai’s thesis play out over the coming months. (In order to watch Lai’s track record, click here)
Nio has good support amongst Lai’s colleagues, although the present valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and 4 Holds. But, the share gains keep coming in heavy and fast, as well as the $52.28 average price target now indicates shares will decline by ~19 % with the next 12 months.