In case anybody 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 % after the turn of season.
The company has been a key beneficiary of the present trend for both EV makers and development stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, exactly the reason he thinks Nio is going to continue to swap 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) answer based on Nvidia architecture. A solid state battery for the next brand new model – an ET7 sedan – boasting 150kwh capacity or maybe range of around 1,000km, and the commercialization of LiDar to provide super sensing capability on ET7.
Many fascinating of all the, nevertheless, will be the first of articles monetization? e.g. Ad as a service.
Lai believes this opens up a whole new world of monetization options for automobile makers and suggests future cars 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 will be higher or similar than the one time AD option 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 suggests some content revenue could increase quickly 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 retail price objective up from fifty dolars to a street high of $75. Investors could be pocketing profits of 18 %, should Lai’s thesis play out over the coming months. (to be able to view Lai’s track record, click here)
Nio has good support amidst Lai’s colleagues, although its present valuation provides 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 the $52.28 average priced target today indicates shares will decline by ~19 % over the next twelve months.