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If anybody was under the impression electric-powered 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 thirty one % after the turn of season.

The company has been a major beneficiary of the present trend for both EV manufacturers as well as development stocks. Following the recent annual Nio Day event, J.P. Morgan analyst Nick Lai counts 4 strategic milestones, exactly the reason he feels Nio will continue to exchange more like a fast-growth technology/EV stock than a carmaker.

These include the pivot away 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 – offering 150kwh capacity or range of over 1,000km, and the commercialization of LiDar to deliver super sensing capability on ET7.

The majority of fascinating of all the, nevertheless, will be the first of content monetization? e.g. Advertisement as a service.

Lai believes this opens up a complete new world of monetization choices for car makers and suggests succeeding cars will be as smartphones with wheels.

For Nio’s next model, the ET7 sedan, owners are going to be in a position to view a total AD service for Rmb680 a month.

Assuming 5-7 yrs of use, Lai states, Cumulative payment will be higher or similar than the one time AD option payment at Xpeng or Tesla.

In the future, Lai expects Nio will ramp up content monetization revenue in other goods and services.

The analyst’s sensitivity analysis suggests such content revenue might increase quickly from 2022, implying accretion of equity present value of ~US$21-35/shr.

Appropriately, Lai reiterates an overweight (i.e. Buy) rating on NIO shares and bumped the price objective up from $50 to a street high of seventy five dolars. Investors will be able to be pocketing profits of 18 %, ought to 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, however, the current valuation of its provides a conundrum. NIO’s Moderate Buy consensus rating is based on eight Buys and four Holds. But, the share gains keep coming in thick and fast, as well as the $52.28 typical priced target now indicates shares will decline by ~19 % over the following 12 months.

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