If anyone 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 already up by thirty one % since the turn of season.
The company has been a key 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 four strategic milestones, why he believes 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 following new model – an ET7 sedan – offering 150kwh capacity or maybe range of over 1,000km, along with the commercialization of LiDar to give super sensing capability on ET7.
The majority of fascinating of all, however, would be the first of content monetization? e.g. Ad as a service.
Lai believes this opens up a whole new world of monetization options for car manufacturers and also suggests succeeding cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be in a position to get into a complete AD service for Rmb680 a month.
Assuming 5-7 yrs of use, Lai states, Cumulative payment would be similar or higher compared to the one-time AD option payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s awareness analysis indicates some content revenue might increase rapidly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Appropriately, Lai reiterates a heavy (i.e. Buy) rating on NIO shares and bumped the price objective up from fifty dolars to a street high of $75. Investors will be able to be pocketing gains of eighteen %, should Lai’s thesis play through with the coming months. (To view Lai’s track record, click here)
Nio has decent support amongst Lai’s colleagues, however, the present valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and 4 Holds. However, the share gains keep coming in thick and fast, and also the $52.28 typical price target now suggests shares will decline by ~19 % with the following twelve months.