Opera Surges 19% in a Month: Should You Buy the Stock?

Core Insights - Opera Limited (OPRA) shares have increased by 19% in the past month, outperforming the Zacks Computer & Technology sector, which dropped by 0.3%, and the Zacks Internet - Content sector, which rose by 1.9% [1] - The strong stock performance is attributed to impressive second-quarter 2024 results, with revenues reaching $110 million, a 17% year-over-year increase, driven by user adoption and monetization efforts, particularly in advertising and search revenues [1][2] Revenue Breakdown - Advertising revenue grew by 20% year-over-year to $65 million, while search revenues increased by 15% to $45 million [2] - Average revenue per user (ARPU) saw a 25% year-over-year increase, reaching an annualized $1.46 across products and geographies [2] Product and User Growth - In Q2 2024, Opera launched several new products, including Opera One for iOS and the Opera GX gaming browser, which contributed to user base expansion [3] - Opera GX added 500,000 new users in Q2, bringing its total to 30 million monthly active users (MAUs), a 27% year-over-year increase [3] AI and Partnerships - Upgrades to Opera's Aria AI assistant have significantly enhanced user engagement and monetization [4] - The company has established partnerships with major players like Alphabet's Google Cloud, Microsoft, and NVIDIA, which support its growth prospects [4][5] Technological Advancements - Opera's new AI cluster in Keflavik, Iceland, utilizes green energy and NVIDIA DGX SuperPOD with H100 Tensor Core GPUs, promising four times faster training and 30 times faster inference [6] Q3 Guidance - For Q3 2024, OPRA expects revenues in the range of $119-$121 million, indicating a 17% year-over-year increase at the midpoint [7] - The Zacks Consensus Estimate for Q3 2024 revenues is $120.75 million, suggesting a 17.64% growth year-over-year, with earnings expected to grow by 27.78% [7] Valuation - OPRA shares are trading at a significant discount to the industry average, with a forward 12-month Price/Sales ratio of 3.08X compared to the industry average of 6.17X, indicating attractive valuation [8] - The stock currently holds a Zacks Rank 2 (Buy), suggesting it is worth investing in at present [9]