If anybody 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 already up by 31 % after the turn of year.
The company continues to be a major beneficiary of the current trend for both EV manufacturers as well as growth stocks. Sticking to the latest annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he believes Nio is going to continue to exchange a lot more like a fast-growth technology/EV stock compared to a carmaker.
These include the pivot at a distance from the existing products’ Mobileye EQ4 answer to an in-house autonomous driving (AD) solution based on Nvidia architecture. A solid-state battery for the next new model – an ET7 sedan – boasting 150kwh capacity or maybe range of over 1,000km, along with the commercialization of LiDar to give super sensing capability on ET7.
The majority of fascinating of all the, nonetheless, would be the first of articles monetization? e.g. Ad as a service.
Lai thinks this opens up a whole new world of monetization choices for car makers and also suggests succeeding automobiles will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners will be able to get into a total AD service for Rmb680 a month.
Assuming 5 7 yrs of use, Lai states, Cumulative transaction would be higher or similar compared to the one time AD option payment at Tesla or Xpeng.
Down the road, Lai expects Nio will ramp up content monetization revenue in various goods and services.
The analyst’s sensitivity evaluation suggests some content revenue could possibly increase quickly 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 cost goal up from fifty dolars to a neighborhood high of seventy five dolars. Investors may be pocketing profits of 18 %, really should 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, but its current valuation presents a conundrum. NIO’s Moderate Buy consensus rating is actually based on eight Buys and four Holds. Nonetheless, the share gains keep coming in dense and fast, and also the $52.28 typical price target today suggests shares will decline by ~19 % over the following 12 months.