Hindenburg specialises in "forensic financial research” for short sellers so the comments may not be reliable.
It claims that since the company was acquired by a Chinese-based investor group in 2018 prior to its IPO and things have taken a turn for the worse. The company's browser gross margins "collapsed by 22.6 percent in a year" and the company has "swung to negative $12 million in LTM operating cash flow" from a positive $32 million in the 2018 period.
Hindenburg claims Opera's CEO "was recently involved in a Chinese lending business" that saw its shares plunge by more than "80 percent in two years" and that Opera has started to make a "similar and dramatic pivot into predatory short-term loans in Africa and India".
The bulk of Opera's lending business is operated through applications offered on Google's Play Store according to Hindenburg Research and in "violation of numerous Google rules". The company concludes that these applications may be removed by Google at any time which in turn would cause Opera Software to lose a large part of the company's revenue.
According to Hindenburg, Opera generates "over 42 percent of the company's revenue" from its short-term loan business. If that would not be bad enough already, Hindenburg Research's analysis suggests that Opera's CEO is directing company cash into businesses owned by the Chairman to "draw out cash".
Opera has said that the company is aware of and has carefully reviewed the report published by the short seller on January 16, 2020.
“The company believes that the report contains numerous errors, unsubstantiated statements, and misleading conclusions and interpretations regarding the business and events relating to the Company. Opera has recently launched and scaled multiple new businesses and has continued to post strong financial results, and intends to continue leveraging its well-known brand and large user base of more than 350 million users for additional growth. The Company also remains committed to maintaining high standards of corporate governance and constantly evolving our products, practices and governance."
