Shares of Opera (NASDAQ:OPRA) were down 17.4% as of 3:30 p.m. EST on Thursday as the software company fell into the crosshairs of a noted short-seller.
In a new report published this morning, ominously named short-selling firm Hindenburg Research argued that Opera should be trading closer to $2.60 per share -- a 70% discount from Wednesday's close at around $9.
For perspective, Opera shares had already fallen nearly 25% from the company's initial public offering in July 2018 at $12 per share -- a price Hindenburg Research says was largely justified by the since-scuttled growth prospects for Opera's web browser.
The report also alleges Opera has deployed "bait and switch" tactics to lure borrowers to Android apps, enabling its "predatory" microloan business in Africa and India. That would be a clear violation of Google's terms of service, Hindenburg added, and effectively puts "this entire line of business at risk of disappearing or being severely curtailed when Google notices."
While there's a certain sensationalized tone to short reports like these that makes me immediately doubt their authenticity, I'll admit on the surface their arguments seem to correctly highlight obvious risks and headwinds that could face Opera in the coming quarters.
At the very least, it's worth taking a closer look at whether Hindenburg's claims hold any merit. And without an immediate rebuttal from Opera management, it's no surprise the stock is falling hard in response today.