OPRA Stock Analysis #shorts

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Micro cap stock Opera Limited developed the Opera web browser which is advertised as being faster, smarter and safer than alternatives. It’s got a built-in VPN, ad blocking technology and it costs around $4 a month. The company also makes money from a handful of other products.

With 201 million in cash and little debt, Opera’s enterprise value is around 600 million. Meanwhile, revenue over the last 12 months was 307 million and adjusted EBITDA was 62.5 million at an EBITDA margin of 20%.

That means the stock is valued at roughly 2 times revenue or 10 times EBITDA

Last week, Opera stock gained 13% after announcing a $0.80 per share special dividend.

In theory, this makes no sense since the dividend amount will be adjusted out of the share price when the stock goes ex-dividend.

But in this case, there is some logic.

First, Opera is growing nicely, with expected revenue growth of 29% this year. That makes the shares look good value at the 10 times multiple.

Second, investors have long been concerned about the company’s board and its variable interest entity structure.

But governance is starting to look better and the company is now returning excess cash to shareholders via the special dividend.

But these are my personal opinions, not financial advice and I hold no position in this stock. For more detailed investing ideas make sure to visit our website overlookedalpha.com.

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