Opera Market Cap Reaches $1 Billion as Value of Private Rivals Surges

Opera Ltd. (NASDAQ: OPRA) shares tipped the $1 billion valuation level as a consequence of a stock price increase over the past several days. Results of the company’s most recent quarter likely were not the cause. However, with the growth of the use of Opera News worldwide, the monthly active users of which grew 35% to 219 million. Opera News competes with two private news app companies with strong valuations: News Break and SmartNews.

In the most recent quarter, Opera revenue dropped from $47.8 million in the period a year ago to $42.4 million, down 11%. Adjusted net income fell 64% to $9.6 million.

The news aggregation app business has become one of the most successful segments of online media, particularly in terms of user growth. News Break, owned by Particle Media, has raised $54 million, according to Crunchbase, and is valued at several hundred million dollars. SmartNews has raised $180 million and has a valuation of $1.2 billion.

The other two primary competitors in the field are Apple News, which only appears on iOS-powered hardware, and Google News, which has operated for over a decade.

It is difficult to find comparable data among the news apps for monthly or daily users. Many web measurement services, like SimilarWeb and SemRush, do not track app traffic well. One means to measure news aggregation app activity is downloads.

According to Apptopia, over the past several days, among news app downloads at Google Play, News Break, Opera News and SmartNews have held the top three spots. Each uses artificial intelligence to sort through stories from as many as 20,000 other media. Each has the ability to offer localized news down to the town level in the United States.

Much of the Opera News user base is outside North America and Asia. Recently, its Opera News Hub expanded beyond Nigeria to Kenya, Ghana, Côte d’Ivoire, South Africa and Egypt. The company has launched Opera News Lite, a downsized version of the Opera News application. Opera News, the company said, also grew as a major information source about the coronavirus outbreak across Africa and South Asia. As app data show, it has begun to get traction in the United States.

At a $1 billion market cap, the most important valuation issue is whether it is earnings or the promise of a major news business that is the key to the number. Guidance is that revenue will rise by about 25% in 2021, which is unlikely to be the buttress for a stock price based on its high multiple of revenue. On the other hand, the news aggregation business, quickly becoming an alternative to the mainstream and local media, may be among the largest news sectors in the world in the next several years.

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