In case any person was under the impression electric-powered vehicle 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 % since the turn of year.
The company has long been a major beneficiary of the current trend for both EV makers as well as development stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, the reason he feels Nio will continue to trade more like a fast growth technology/EV stock than a carmaker.
These include the pivot out 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 next brand new model – an ET7 sedan – offering 150kwh capacity or perhaps range of more than 1,000km, along with the commercialization of LiDar to give super-sensing capability on ET7.
The majority of fascinating of the, nevertheless, may be the beginning of articles monetization? e.g. Ad as a service.
Lai thinks this opens up a whole brand new world of monetization possibilities for automobile manufacturers and also suggests succeeding cars will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be in a position to access a full AD service for Rmb680 a month.
Assuming 5 7 yrs of use, Lai says, Cumulative payment will be higher or similar 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 services or products.
The analyst’s awareness 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 retail price goal up from $50 to a street high of seventy five dolars. Investors could be pocketing gains of eighteen %, ought to Lai’s thesis play out over the coming months. (To view Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, but the current valuation of its offers a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and four Holds. Nonetheless, the share gains keep coming in heavy and fast, and also the $52.28 average priced target today indicates shares will drop by ~19 % with the next twelve months.