Browser maker Opera’s expansion into money-lending services in Kenya, India and Nigeria apparently violates Google’s rules against short-term loans, a report from research and investment firm Hindenburg Research concluded. The news has pushed Opera’s stock 22% lower since Wednesday, a move that should help Hindenburg make money because it bet that the company’s share price would fall.
The Hindenburg report offers examples of Opera’s “predatory short-term lending” apps — OKash and OPesa in Kenya, CashBean in India and OPay in Nigeria — offering loans that are as short as 15 days. The report also cited a November statement from Opera Chief Financial Officer Frode Fleten Jacobsen, who said the company’s average loan length was about two weeks.
Such practice could violate Google’s October ban on Android apps for short-term loans in the Play Store. The search giant said the decision was made “to protect people from deceptive and exploitative personal-loan terms.” Under the rules, borrowers must have at least 60 days to repay their loans, must clearly disclose interest rates and must offer “a representative example of the total cost of the loan,” according to Google’s personal loan app policy.
On Tuesday, Opera defended its products. “We continue to provide more than 60 days repayment options for users, as required,” the company said in a statement. Last week, Opera said Hindenburg’s report contained “numerous errors, unsubstantiated statements, and misleading conclusions and interpretations regarding the business of and events relating to the company.”
Hindenburg founder Nate Anderson stood by his firm’s research and added it’s still shorting Opera stock. “Our business model involves betting against the worst companies we can find,” Anderson said via email. “So we continue to be short shares of Opera.”
Among its achievements, Hindenburg boasts of research that led to a handful of cases with SEC charges and investigations and to several executive resignations.
Google didn’t respond to a request for comment.
Opera, publicly traded since its 2018 initial public offering, is expanding beyond its browser business. The typical cash cow for browser makers is ad revenue shared by search engine partners. But Opera is a tiny player compared to Google’s dominant Chrome, accounting for only 2.3% of web usage, according to analytics firm StatCounter.
Opera doesn’t dispute the fact that it lends money through the apps. Indeed, on Monday, it defended its “microlending” business as “practical and helpful” in regions where credit cards can be a rarity. In November, Jacobsen said Opera lent about $5 million in its most recent quarter.
Opera’s lending apps lure prospective customers with appealing loan rates that appear to comply with Google’s policy, Hindenburg said. But after potential borrowers enter their personal information, the apps “either deny the borrower or grant a short-term loan with sky-high rates,” Hindenburg says. Annual percentage rates were 365% with on-time repayment and 730% if borrowers repay late on some of the apps, the report said.
In its Tuesday statement, Opera criticized Hindenburg’s interest-rate math as “highly inaccurate and misleading.” For example, with OKash, “the total amount a user will ever need to pay back [is] two times the principal amount,” even if the borrower repays much later than the loan comes due.