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 now up by 31 % since the turn of year.
The company has been a key beneficiary of the present trend for both EV manufacturers as well as development stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, the reason he believes Nio will continue to swap a lot more like a fast growth technology/EV inventory 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 – boasting 150kwh capacity or perhaps range of over 1,000km, along with the commercialization of LiDar to deliver super sensing capability on ET7.
The majority of intriguing of all, nevertheless, may be the first of content monetization? e.g. Advertisement as a service.
Lai thinks this opens up a whole new world of monetization options for car manufacturers and also suggests succeeding automobiles will be like smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be able to get into a total 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 option payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in different services or products.
The analyst’s sensitivity evaluation indicates some content revenue could possibly 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 purchase price goal up from fifty dolars to a block high of $75. Investors will be able to be pocketing gains of 18 %, really should Lai’s thesis play out over the coming months. (In order to view Lai’s track record, click here)
Nio has decent assistance amongst Lai’s colleagues, though its present valuation provides a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. However, the share gains keep coming in thick and fast, and also the $52.28 typical price target today suggests shares will drop by ~19 % over the next twelve months.