Opera Limited Shows Growth Amid Market Challenges
Performance Overview
Opera Limited OPRA shares have risen by 16.1% so far this year, lagging behind the Zacks Computer & Technology sector’s increase of 25.4%. However, they have outperformed the Zacks Internet – Content sector, which grew by only 6.1%.
Revenue Growth and User Engagement
Opera Limited is experiencing strong growth driven by user adoption and improved monetization efforts, particularly in advertising and search revenues.
In the second quarter of 2024, advertising revenues soared 20% year over year, reaching $65 million. Similarly, search revenues grew 15%, reaching $45 million.
Opera Limited also reported a 25% rise in average revenue per user (ARPU), which now stands at an annualized $1.46 across its diverse products and geographic areas.
Price Trends and Market Consensus
Opera Limited Sponsored ADR price-consensus-chart | Opera Limited Sponsored ADR Quote
Examining Investment Potential in OPRA
Could OPRA stock be a buying opportunity given its growing user base and expanding product lineup?
Innovative Features Enhance User Experience
Opera Limited is committed to improving user experience through its AI feature, Aria. This includes functionalities such as voice and image generation, command line prompts, and awareness of page context to create a more user-friendly browsing experience.
The recent launch of Tab Commands enables users to manage their browser tabs interactively with Aria, while ensuring user privacy by not transferring tab data to the server.
In the second quarter of 2024, Opera Limited rolled out various updates and products, including Opera One for iOS and the Opera GX gaming browser, significantly boosting its user count. Notably, Opera GX gained 500,000 new users in just this quarter, bringing its total to 30 million monthly active users (MAUs), a 27% increase year over year.
Strategic Partnerships Boost Potential
The growth of OPRA is further supported by a strong partnership network, including Alphabet’s GOOGL Google Cloud, Microsoft MSFT, and NVIDIA NVDA.
In May, Opera Limited announced a partnership with Alphabet’s Google Cloud to incorporate Gemini models into Aria, enhancing user experience with advanced image and text-to-audio capabilities.
Furthermore, Opera Limited launched an Arm-optimized version of its browser, which promises over double the speed on Arm-based Windows systems, benefitting from support by Microsoft’s App Assure and Qualcomm Technologies.
Its new AI cluster located in Keflavik, Iceland, operates on green energy with NVIDIA DGX SuperPOD utilizing H100 Tensor Core GPUs, enhancing training and inference capabilities considerably for its AI features.
Positive Outlook for Q3 2024
Looking ahead to the third quarter of 2024, OPRA anticipates revenues to fall between $119 million and $121 million, marking a 17% year-over-year increase at the midpoint.
Currently, the Zacks Consensus Estimate for third-quarter 2024 revenues stands at $120.75 million, which reflects a robust growth expectation of 17.64% year over year.
The earnings consensus remains at 23 cents, indicating a 27.78% increase compared to the previous year.
Valuation and Ranking Analysis
Currently, OPRA shares are trading at a significant discount compared to the industry average, presenting a compelling investment opportunity based on valuation. The stock holds a Valuation Score of B and appears attractively valued at this time.
The forward 12-month Price/Sales ratio for OPRA is 3.18X, well below the industry average of 6.73X.
Given its strong product lineup and partnerships, Opera Limited is expected to drive demand for its offerings. The stock’s appealing valuation makes it an enticing option for investors right now.
As it stands, OPRA holds a Zacks Rank #1 (Strong Buy). You can view the complete list of today’s Zacks #1 Rank stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
