In case any person 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 now up by 31 % since the turn of season.
The company has been a key beneficiary of the present trend for both EV manufacturers as well as growth stocks. Following the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he thinks 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) solution based on Nvidia architecture. A solid state battery for the following new model – an ET7 sedan – boasting 150kwh capacity or maybe range of over 1,000km, and the commercialization of LiDar to give super-sensing capability on ET7.
Most fascinating of all, however, may be the first of content monetization? e.g. Ad as a service.
Lai thinks this opens up a complete new world of monetization choices for car makers and also suggests succeeding cars will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be ready to get into a total AD service for Rmb680 a month.
Assuming 5-7 years of usage, Lai states, Cumulative transaction 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 other products or services.
The analyst’s awareness analysis indicates 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 goal up from fifty dolars to a street high of seventy five dolars. Investors may be pocketing gains of eighteen %, really should Lai’s thesis play out with the coming months. (In order to watch Lai’s track record, click here)
Nio has good support amidst Lai’s colleagues, although the current valuation of its presents a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and four Holds. But, the share gains keep coming in dense and fast, and the $52.28 average priced target now indicates shares will drop by ~19 % over the next twelve months.