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 season.
The company has been a prime beneficiary of the present trend for both EV makers as well as growth stocks. Sticking to the latest 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 following brand new model – an ET7 sedan – boasting 150kwh capacity or range of more than 1,000km, and the commercialization of LiDar to deliver super sensing capability on ET7.
Most intriguing of the, however, would be the first of content monetization? e.g. Ad as a service.
Lai believes this opens up a whole brand new world of monetization possibilities for automobile makers and suggests succeeding automobiles will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be in a position to view a full AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai states, Cumulative transaction will be higher or similar than the one-time AD choice payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in other goods and services.
The analyst’s awareness evaluation indicates some content revenue could increase quickly from 2022, implying accretion of equity present value of ~US$21 35/shr.
Accordingly, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the price target up from fifty dolars to a neighborhood high of seventy five dolars. Investors may be pocketing gains of eighteen %, really should Lai’s thesis play out with the coming months. (to be able to view Lai’s track record, click here)
Nio has good support amidst Lai’s colleagues, however, the current valuation of its provides a conundrum. NIO’s Moderate Buy consensus rating is actually based on 8 Buys and four Holds. However, the share gains keep coming in thick and fast, and also the $52.28 typical priced target now suggests shares will drop by ~19 % over the next twelve months.