If anybody was under the impression electric-powered car 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 continues to be a key beneficiary of the current trend for both EV manufacturers as well as development stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, exactly why he thinks Nio is going to 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 solution to an in-house autonomous driving (AD) solution based on Nvidia architecture. A solid state battery for the next brand new model – an ET7 sedan – boasting 150kwh capacity or perhaps range of more than 1,000km, and the commercialization of LiDar to provide super sensing capability on ET7.
Many intriguing of all the, nonetheless, will be the first of articles monetization? e.g. Ad as a service.
Lai thinks this opens up a complete brand new world of monetization options for car manufacturers and suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be ready to access a full AD service for Rmb680 a month.
Assuming 5 7 years of use, Lai says, Cumulative payment would be similar or higher 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 goods and services.
The analyst’s sensitivity analysis suggests such 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 cost target up from $50 to a neighborhood high of $75. Investors could be pocketing gains of 18 %, ought to Lai’s thesis play out over the coming months. (To view Lai’s track record, click here)
Nio has good support amongst Lai’s colleagues, although its present valuation presents a conundrum. NIO’s Moderate Buy consensus rating is based on 8 Buys and 4 Holds. But, the share gains keep coming in heavy and fast, and also the $52.28 typical price target today suggests shares will decline by ~19 % over the next 12 months.