If 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 already up by thirty one % after the turn of season.
The company has long been a major beneficiary of the current trend for both EV manufacturers and development stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai matters 4 strategic milestones, exactly why he feels Nio will continue to swap more like a fast growth technology/EV stock compared to 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 next new model – an ET7 sedan – offering 150kwh capacity or maybe range of more than 1,000km, and the commercialization of LiDar to give super sensing capability on ET7.
Many intriguing of the, nevertheless, would be the first of articles monetization? e.g. Ad as a service.
Lai feels this opens up a complete new world of monetization choices for automobile manufacturers and also suggests succeeding automobiles will be like smartphones with wheels.
For Nio’s next model, the ET7 sedan, owners are going to be able to view a complete AD service for Rmb680 a month.
Assuming 5-7 years of usage, Lai states, Cumulative transaction will be similar or higher compared to the one-time AD choice payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in different goods and services.
The analyst’s awareness evaluation suggests such content revenue could possibly increase rapidly 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 price target up from $50 to a block high of seventy five dolars. Investors will be able to be pocketing gains of eighteen %, ought to Lai’s thesis play out with the coming months. (to be able to view Lai’s track record, click here)
Nio has decent support amidst Lai’s colleagues, although the current valuation of its offers 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 average priced target today suggests shares will decline by ~19 % over the following twelve months.