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 already up by thirty one % after the turn of year.
The company has been a key beneficiary of the current trend for both EV makers and growth stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, exactly why he feels Nio will continue to exchange more like a fast growth technology/EV stock than a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 solution 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 maybe range of over 1,000km, as well as the commercialization of LiDar to give super-sensing capability on ET7.
Many fascinating of all the, however, may be the beginning of content monetization? e.g. Ad as a service.
Lai feels this opens up a whole new world of monetization choices for car manufacturers and also suggests future cars will be as smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners will be ready to access a complete AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai states, Cumulative payment will 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 various products or services.
The analyst’s sensitivity analysis suggests such content revenue could 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 cost objective up from fifty dolars to a neighborhood high of $75. Investors could be pocketing profits of 18 %, really should Lai’s thesis play out over the coming months. (to be able to view Lai’s track record, click here)
Nio has decent support amongst Lai’s colleagues, however, its current valuation provides 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 the $52.28 average price target now suggests shares will decline by ~19 % with the next 12 months.