Why Opera Stock Is Plummeting Today

What happened

Opera (OPRA -1.91%) stock is sinking today despite the company recently reporting better-than-expected second-quarter results. The technology conglomerate's share price was down 15.8% as of noon ET, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 index was down 0.8%, and the Nasdaq Composite index's level had fallen 1.3%. 

Opera published its Q2 results before the market opened this morning and posted earnings of $0.15 per share on sales of $94.13 million. For comparison, the average analyst estimate had called for the company to post per-share earnings of $0.12 on revenue of $91.66 million. 

So what

In addition to the market generally facing some bearish pressures today, investors appear to be reacting negatively to a decline in Opera's monthly active users (MAUs) in Q2. The company ended the quarter with 319 million active users, down from the 316 million MAUs it had at the end of the first quarter.

Opera's revenue still climbed 20.9% year over year in the second quarter, marking the company's 10th consecutive quarter with annual sales growth above 20%. By focusing on users with higher monetization potential in Western markets, the company has been able to deliver strong sales growth and margin expansion even with the MAU decline. But investors appear to be worried that Opera won't be able to rely on this strategy to drive growth over the long term. 

Now what

In addition to the MAU drop-off, the market may be worried about aspects of Opera's forward guidance. The company's Q3 guidance for a 15% annual sales increase does suggest some near-term growth deceleration, but the company actually increased its full-year performance target.

Management now expects sales to come in between $380 million and $390 million -- up from its previous guidance range for sales between $373 million and $390 million. Additionally, it now expects non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $80 million and $84 million, while it had previously guided for adjusted EBITDA between $77 million and $83 million.