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 31 % since the turn of year.
The company continues to be a key beneficiary of the current trend for both EV makers and development stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai matters four strategic milestones, why he feels Nio is going to continue to trade more like a fast-growth technology/EV stock compared to a carmaker.
These include the pivot out 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 – offering 150kwh capacity or maybe range of over 1,000km, as well as the commercialization of LiDar to deliver super-sensing capability on ET7.
Most fascinating of the, however, will be the beginning of articles monetization? e.g. Ad as a service.
Lai believes this opens up a whole brand new world of monetization options for car manufacturers and suggests future cars will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be in a position to get into a complete AD service for Rmb680 a month.
Assuming 5-7 years of use, Lai says, Cumulative payment would be higher or similar compared to the one time AD choice payment at Xpeng or Tesla.
Down the road, Lai expects Nio will ramp up content monetization revenue in various services or products.
The analyst’s awareness evaluation indicates some content revenue could 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 retail price objective up from $50 to a street high of $75. Investors could be pocketing profits of eighteen %, should Lai’s thesis play through with the coming months. (To view Lai’s track record, click here)
Nio has good assistance amongst Lai’s colleagues, although its current valuation provides a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and four Holds. But, the share gains keep coming in heavy and fast, and also the $52.28 average price target now indicates shares will drop by ~19 % over the following twelve months.