Opera (OPRA 0.67%) investors beat the market by a wide margin this week. Shares were up 24% through Thursday trading, according to data provided by S&P Global Market Intelligence, while the S&P 500 gained just 0.3%. The digital platform specialist’s stock is up over 40% so far in 2023 compared to a 3.7% increase in the broader market.
This week’s rally was sparked by a fourth-quarter earnings update that was packed with good news for shareholders.
Opera announced on Monday that sales through late December rose 33% while adjusted earnings rose to $23 million, or 24% of sales. Both figures beat executives’ short-term targets, reflecting solid demand for the company’s browser, gaming, and Web3 products. “I am very pleased that yet again we were able to outperform our expectations, on top of repeatedly raised guidance,” co-CEO Song Lin said in a press release.
While Opera is finding room to monetize its ad platform in a challenging selling environment, the company is still working toward sustained profitability. Operating profit this past year improved to $41 million compared to a $6 million loss in 2021. On a non-GAAP (adjusted) basis, earnings landed at 8.4% of sales compared to a 9% loss in the prior year.
Wall Street is excited about the potential for Opera’s digital platforms, including its new efforts to integrate AI-generated content into mobile and PC browsers. The company’s profitability should rise, too, as the business gains a bigger user footprint.
It’s possible that Opera’s positive momentum will be slowed by a further weakening in the advertising market or by a recession in 2023. To date, though, the company seems to be having no trouble attracting more engagement — and monetizing those gains. Continued wins along these lines should help investors generate market-beating returns with this growth stock.