In case anyone was under the impression electric 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 31 % since the turn of season.
The company continues to be a key beneficiary of the present trend for both EV manufacturers and development stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, the reason he thinks Nio will continue to swap a lot more like a fast-growth technology/EV stock than a carmaker.
These include the pivot away 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 following brand new model – an ET7 sedan – boasting 150kwh capacity or range of around 1,000km, along with the commercialization of LiDar to provide super sensing capability on ET7.
Many intriguing of the, however, may be the beginning of content monetization? e.g. Ad as a service.
Lai thinks this opens up a whole brand new world of monetization possibilities for automobile manufacturers and suggests future cars will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to get into a full AD service for Rmb680 a month.
Assuming 5-7 yrs of use, Lai states, Cumulative transaction will be similar or higher compared to the one time AD choice payment at Xpeng or Tesla.
In the future, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s awareness evaluation indicates some content revenue might increase rapidly from 2022, implying accretion of equity present value of ~US$21-35/shr.
Appropriately, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the purchase price goal up from $50 to a block high of $75. Investors will be able to be pocketing gains of 18 %, should Lai’s thesis play out with the coming months. (In order to view Lai’s track record, click here)
Nio has good assistance amongst Lai’s colleagues, however, its present valuation offers a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and four Holds. Nonetheless, the share gains keep coming in thick and fast, and also the $52.28 typical price target now indicates shares will decline by ~19 % over the following 12 months.