If anyone 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 31 % after the turn of season.
The company has long been a major beneficiary of the current trend for both EV makers and growth stocks. Sticking to the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts four strategic milestones, why he thinks Nio will continue to exchange a lot more like a fast growth technology/EV stock 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 range of around 1,000km, as well as the commercialization of LiDar to deliver super-sensing capability on ET7.
Most fascinating of the, however, may be the first of articles monetization? e.g. Advertisement as a service.
Lai believes this opens up a complete new world of monetization options for automobile makers and also suggests future automobiles will be as smartphones with wheels.
For Nio’s next design, the ET7 sedan, owners are going to be able to access a complete AD service for Rmb680 a month.
Assuming 5 7 years of use, Lai says, Cumulative transaction would be similar or higher compared to the one time AD choice payment at Tesla or Xpeng.
In the future, Lai expects Nio will ramp up content monetization revenue in various goods and services.
The analyst’s awareness evaluation suggests some content revenue might 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 purchase price objective up from $50 to a block high of $75. Investors could be pocketing profits of 18 %, ought to Lai’s thesis play out over the coming months. (In order to watch Lai’s track record, click here)
Nio has decent assistance amidst Lai’s colleagues, though its present valuation presents a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and four Holds. But, the share gains keep coming in heavy and fast, as well as the $52.28 average price target today suggests shares will decline by ~19 % over the following twelve months.