Great article ! I think you are ultra conservative in the valuation given the 20%+ revenue growth and AEBITDA growth towards the 30% target. Couple of minor nit-picks 1)Song Lin has been with company for more than decade. Probably you meant Hongyi Zhou who owns around 20% of Opera, 2nd behind CEO Yahui Zhou 2)Financial terms of Nanobank changed recently not starX 3) Opay's 6.44% stake is worth $128M based on last $2B funding round.
Thanks for your comment. I am subscribing to your substack, looking forward to learn more about Opera on there.
Will Correct 1&2. Should have re-checked the facts as I seem to have shuffled stuff around.
Regarding 3, can you explain the discrepancy between the $128m and the $84.6m on their books which reflects the last funding round ? Could it be due to the preferred/common share mix ? Anyways doesn't really matter that much to the thesis.
Regarding valuation, my point was to show that there was significant room for a 2x in under a year. I don't understand the long term fundamentals of the business enough for me to be comfortable with a buy and hold approach, which would require me to underwrite 5 year IRR. That could change as I learn more about the business.
Furthermore, when your main comp is google, it's tough not to trade at a discount unfortunately.
It may not be fair, but I wont expect a 25x EBITDA multiple on OPRA if Google is trading for 20x EBITDA.
Thanks again for your comment, will be following your side of the story closely.
I think Opera has typically used 25-35% DLOM on its minority stakes so the books reflect the DLOM valuation of Opay. As you said, it does not really matter to Core Opera thesis.
I get it that you are trying to show that even with most conservative valuations, Opera is at least a double.
I also look forward to your analysis going forward as Opera reports its quarterly earnings.
Great article ! I think you are ultra conservative in the valuation given the 20%+ revenue growth and AEBITDA growth towards the 30% target. Couple of minor nit-picks 1)Song Lin has been with company for more than decade. Probably you meant Hongyi Zhou who owns around 20% of Opera, 2nd behind CEO Yahui Zhou 2)Financial terms of Nanobank changed recently not starX 3) Opay's 6.44% stake is worth $128M based on last $2B funding round.
Thanks for your comment. I am subscribing to your substack, looking forward to learn more about Opera on there.
Will Correct 1&2. Should have re-checked the facts as I seem to have shuffled stuff around.
Regarding 3, can you explain the discrepancy between the $128m and the $84.6m on their books which reflects the last funding round ? Could it be due to the preferred/common share mix ? Anyways doesn't really matter that much to the thesis.
Regarding valuation, my point was to show that there was significant room for a 2x in under a year. I don't understand the long term fundamentals of the business enough for me to be comfortable with a buy and hold approach, which would require me to underwrite 5 year IRR. That could change as I learn more about the business.
Furthermore, when your main comp is google, it's tough not to trade at a discount unfortunately.
It may not be fair, but I wont expect a 25x EBITDA multiple on OPRA if Google is trading for 20x EBITDA.
Thanks again for your comment, will be following your side of the story closely.
I think Opera has typically used 25-35% DLOM on its minority stakes so the books reflect the DLOM valuation of Opay. As you said, it does not really matter to Core Opera thesis.
I get it that you are trying to show that even with most conservative valuations, Opera is at least a double.
I also look forward to your analysis going forward as Opera reports its quarterly earnings.