Opera Ltd: European Web Browser Up 82% in 2019, Still a Bargain

Opera Ltd: European Web Browser Up 82% in 2019, Still a Bargain
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Opera Ltd Is on Sale Following Tech Stock Sell-Off

Opera Ltd (NASDAQ:OPRA) has been having a fabulous year. OPRA stock is up approximately 82% since the start of the year, and thanks to the recent sell-off in tech stocks, it is in a better trading range.

Despite the strong gains made by Opera stock this year, it’s still a bargain. The company reported great second-quarter results, its user growth remains robust, and it’s projecting double-digit revenue growth in 2019 and 2020.

OPRA Stock Overview

Opera Ltd has nothing to do with hitting high notes. Instead, the Norway-based company is one of the world’s leading Web browser providers for mobile phones and PCs.

It also provides artificial intelligence (AI) digital content platforms and financial technology (fintech).

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This company may not be all that well known to investors in North America, but the Opera browser is very well known in massive under-served markets, like Africa (where Opera has 80%+ brand awareness), Asia, Europe, and the Middle East. (Source: “Opera Investor Presentation September 2019,” Opera Ltd, last accessed October 3, 2019.)

The company’s products include a browser for computers (“Windows,” “macOS,” and “Linux”). It also makes mobile apps for “Android” and “iOS.”

Opera browsers are the chosen gateway to the Web for 350 million monthly active users (MAUs).

Opera’s mobile apps are increasingly popular and profitable. Case in point: “OPay,” the fintech division of Opera, launched “Okash,” a stand-alone mobile app that provides users with access to small, short-term loans.

The average loan size is around $40.00 and comes with an interest rate as low as one percent per day. The loan term ranges from seven to 30 days.

OKash launched in Kenya in March 2018, in India in the first quarter of 2019, and in Nigeria in the third quarter of 2019.

And business has been booming. During the second quarter, Okash was responsible for more than 1.8 million microloans, a 138% increase from the first quarter of 2019.

OPRA Stock Information

Market Cap $1.1 Billion
52-Week Change 10.4%
52-Week High $14.94
52-Week Low $5.31
Shares Outstanding 110.3 Million
Float 21.2 Million
50-Day Moving Average $11.93
200-Day Moving Average $10.18

(Source: “Opera Limited (OPRA),” Yahoo! Finance, last accessed October 3, 2019.)

Opera stock has been bullish for much of 2019. In early September, it hit a new 52-week high of $14.94, for a year-to-date gain of 171%.

Like the broader tech industry, OPRA stock has sold off over the last month. It’s currently trading at $10.25 per share, around a tested support level.


Chart courtesy of StockCharts.com

Strong Second-Quarter Revenue Growth

On August 22, Opera Ltd announced that its revenue for the second quarter (ended June 30) increased 55% year-over-year to $61.7 million. That was higher than the top end of the company’s guidance range. (Source: “Opera Limited announces second quarter 2019 financial results,” Opera Limited, August 22, 2019.)

Search revenue was up 8.3% year-over-year, at $21.4 million; advertising revenue was up 17.8% year-over-year, at $16.2 million; and technology licensing was down 22.1% year-over-year, at $4.9 million (Opera expects revenue from this category to fall over time).

Fintech revenue was up 130% sequentially (no comparable revenue in 2018), at $11.6 million, and retail revenue was $7.6 million (no comparable revenue in 2018).

Net income for the second quarter was $3.4 million ($0.03 per share), versus $7.4 million ($0.07 per share) in the second quarter of 2018.

Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) was $3.1 million, within the company’s guidance range of $2.0 to $5.0 million.

User growth remains solid, with 227 million smartphone MAUs and 65 million PC users, representing year-over-year growth of 14%.

In light of the positive results the company achieved in the first half of 2019, it’s raising its full-year revenue guidance to a range of $270.0 to $290.0 million. At the midpoint, this represents year-over-year growth of 63%.

Opera also raised the lower end of its full-year adjusted EBITDA to a range of $35.0 to $45.0 million, up from prior guidance of $30.0 to $45.0 million.

Analyst Take

Opera Ltd is a diversified tech stock that is growing across multiple fronts. The company is increasing its user base and is in the early stages of expanding its revenue-generating streams such as advertising, classifieds, and fintech.

Its newer initiatives—Okash, “Opera News” (with 163+ million users), and “Opera Ads”—are already contributing meaningful revenue to the company’s bottom line. So much so that Opera is at an inflection point where new revenue streams are exceeding its browser-based revenue.

All of which should lead to significant long-term growth and profitability, as well as a higher Opera stock price.