AI And Fintech Expansion Will Unlock New Opportunities

Key Takeaways

• AI-powered product launches and expansion into premium, privacy-focused offerings are driving higher user engagement, retention, and margin growth across diverse markets.
  
• Diversification into fintech and targeted advertising is unlocking new revenue streams, lowering reliance on core browser advertising while leveraging global digitalization trends.
  
• Heavy regulatory, technological, and market dependencies threaten Opera's fintech, AI browser, and global user growth ambitions, exposing it to profitability and revenue scalability challenges.

Catalysts

Provides mobile and PC web browsers and related products and services in Norway and internationally.

• The upcoming launch and integration of Opera Neon-an AI-native browser designed as a productivity gateway for knowledge workers-positions Opera to capitalize on the workplace shift toward AI-powered workflows, with potential to increase both ARPU through premium subscriptions and overall revenue via higher engagement and differentiated advertising.
  
• Rapid adoption and global expansion of MiniPay, Opera's stablecoin-based wallet (now at 9 million activated wallets, 250 million transactions), open substantial new monetization channels in emerging fintech and remittance markets, creating additional revenue streams that diversify away from core browser advertising and search.
  
• Strong, sustained user growth in higher-ARPU Western markets and strategic gaming/geographic expansion (e.g., Opera GX in South Korea and Japan) suggest an ongoing mix shift to more lucrative user segments, supporting higher average revenue per user and gross margin expansion.
  
• Accelerating global e-commerce and digital advertising revenues, particularly intent-based ads within retail, travel, and gaming, leverage secular trends in digitalization and mobile commerce, with Opera's ad revenue (44% YoY growth) and e-commerce-focused verticals driving continued top-line outperformance.
  
• Continued innovation in privacy, security, lightweight architecture, and AI-powered features directly align with rising consumer demand for secure, privacy-enhancing, and efficient browsers, increasing Opera's user retention and premium upsell potential, positively impacting future earnings and operating margins.

Opera Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Opera's revenue will grow by 14.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 14.5% today to 18.1% in 3 years time.
• Analysts expect earnings to reach $152.0 million (and earnings per share of $1.62) by about August 2028, up from $80.6 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.6x on those 2028 earnings, up from 18.0x today. This future PE is lower than the current PE for the US Software industry at 36.5x.
• Analysts expect the number of shares outstanding to grow by 1.16% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.96%, as per the Simply Wall St company report.

Opera Future Earnings Per Share Growth

Risks

• Opera's ability to monetize its MiniPay stablecoin wallet and other fintech initiatives heavily depends on favorable and stable regulatory environments for cryptocurrencies and stablecoins globally; any negative shifts or heightened compliance burdens could restrict product expansion and directly hamper revenue growth and long-term fintech earnings.
  
• The company's major AI browser launch, Opera Neon, relies on integrating third-party AI models rather than developing proprietary large language models, leaving Opera vulnerable to rising licensing, compute, and infrastructure costs, as well as technological dependence on major AI providers-which could compress net margins and limit differentiation in an intensifying competitive landscape.
  
• Opera's high revenue concentration in advertising, e-commerce, and search partnerships exposes it to macroeconomic volatility (as evidenced by recent tariff headwinds) and potential shifts or terminations in key partnerships, amplifying the risk of sudden fluctuations or declines in revenue streams and overall profitability.
  
• The browser market remains dominated by large tech ecosystem players (Google, Apple, Microsoft), with Opera consistently positioned as an alternative or "second-choice" browser; this reputation, coupled with user acquisition constraints due to default settings and ecosystem lock-in, threatens Opera's ability to materially expand its global user base and could cap longer-term revenue scalability.
  
• Opera's growth narrative is dependent on high-value user markets and international expansion, but increasing privacy regulations, currency fluctuations impacting operating expenses, and the ongoing decline in traditional web browsing (in favor of apps, vertical integration, and emerging AI assistants) may structurally challenge ARPU growth and put long-term pressure on both top-line revenue and operating margins.

Valuation

• The analysts have a consensus price target of $25.786 for Opera based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $33.0, and the most bearish reporting a price target of just $23.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $841.1 million, earnings will come to $152.0 million, and it would be trading on a PE ratio of 19.6x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of $16.17, the analyst price target of $25.79 is 37.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.