How Opera Stock can go parabolic with Volume
At $1.0B market cap, Opera stock has been languishing for 3 year since going IPO at $12 but now, with 50% YoY revenue growth to expected $247M 2021 revenue and exciting growth acceleration opportunities with its fintech and gaming initiatives, I think it is ripe for a big move to upside soon.
How Can It Go Parabolic
Opera has gotten very little investor coverage and was even a target of flimsy short report which I believe was to shake and keep retail investor out. Up until now, it has not gotten attention of hedge funds and large institutions, which surely changed in Q1 2021. Several hedge funds made new investment in Opera in Q1 2021, which probably was the reason for jump in share price from $9 to $14 in a span of 10 days in Feb’21.
Since May 15th, the filing date for 13-F, the volume in OPRA has mysteriously dried from 200k shares/day to around 40k shares/day. So looks like no more shares available for selling and, now that the shares are concentrated into the hands of few hedge funds, most with the philosophy of long term horizon for investing in high growth and undervalued equities, I think most of recent selling has been short selling.
For period of May 16 to May 28th when the volume suddenly dropped from 200k average in previous period to 40k, we will know if short interest increased further from 488k when open short interest report comes out June 9th.
This is where it gets interesting.
Take a look at ownership of around 116M ADS and float.
Out of total float of around 15M ADS, institutions owns around 14M ADS. Very little float is owned by retail(myself included) of around 1M.
None of the institutions which held significant stake in OPRA in Q4’20 has decreased their position. In fact, they have added to it or kept it unchanged.
In fact, Toroso has been adding more OPRA in Q2’21 as seen by $BLOK holdings.
Assuming these institution and retail continue to hold, or add to their position, the ~500k share short position will come under pressure.
If there is any new coverage initiation on OPRA with target SP in range of 30+ which I believe is the floor due to sum of part analysis, more institutions with reliance on sell side analyst, will discover it and put more buying pressure.
If retail investors or other buy side research driven hedge funds continue doing their DD and believe in OPRA story and its massively underpriced stock price, it will bring more volume.
With ~500k shares short and average volume of 40k and SP at ~$12, imagine what can happen if couple of hedge funds try to initiate a 500k position or 1000 retail investor trying to buy 1000 shares each at current price of ~12 ?
I think it will cause the SP to go parabolic into high 20’s/low 30’s in a matter of few days. Once OPRA goes over $15.67, all time high, I think it will bring attention from larger investment community, institutions and buy side and sell side analyst. This will bring more buyers and hence further appreciation in SP.
With many catalyst on horizon, 50% YoY revenue growth, hockey stick growth in its minority investments in Opay and Starmaker and new fintech and gaming initiatives, I think Opera is on the path to highly profitable $400-$450m revenue run rate next year and smart money knows that, and hence are all these shenanigans to keep the retail out with short attacks, low balled price targets from sell-side analyst, stagnated stock price action despite excellent earning results and if everything fail, fear mongering of 80% Chinese Ownership. Any investor who does proper due diligence, hopefully should be able to see the bluff and see true value of Opera, at the very least around $35-$40, like I do.
Disclaimer : This is not investment advice or recommendation. Do your own DD on OPRA and let me know if I am wrong in my analysis or missed any key aspects. I own OPRA shares .These are my thoughts on why I think OPRA is massively undervalued by market but will eventually realize its true value as it keeps on delivering good results. If this analysis, intrigued you to look into Opera, please do your own due diligence, research and reply/comment on my twitter or on this blog if you agree/disagree with my analysis.