Why Okta Stock Was Up Big This Week – The Motley Fool

Date:

- Advertisement -

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
Okta (OKTA -4.27%) investors had a great week. The cybersecurity specialist’s shares jumped 35% through Thursday trading, according to data provided by S&P Global Market Intelligence. That’s compared to a 1.3% increase in the wider market. The stock remains in deeply negative territory for the year, though. It is down nearly 70% since the start of 2022.
This week’s rally was sparked by a surprisingly strong third-quarter earnings report.
Okta announced late Wednesday that Q3 sales rose 37% to $481 million. That result easily surpassed the company’s late August forecast of sales landing between $463 million and $465 million. Okta executives said the company is making progress in its integration of the recently acquired Auth0 business.
“We’re pleased with our third quarter results and the early traction of our refined go-to-market strategy,” CEO Todd McKinnon said in a press release.
Investors were even happier to see that Okta took a big step toward profitability. Net losses shrank to less than $1 million on a non-GAAP basis compared to $10 million a year ago. Okta generated positive free cash flow, too.
The best news is that Okta now sees net losses moderating at a much quicker pace over the next several months thanks to cost cuts. Operating loss will likely land at just $40 million, executives project, rather than the over $100 million loss management had forecast a few months ago.
Still, the stock remains risky given its exposure to slowing IT spending. Okta is already seeing signs of pressure on the industry, executives said in a conference call, which is making it harder to win new clients.
The long-term outlook is bright for this software-as-a-service stock, assuming Okta can steadily improve profit margins while gaining market share. But the next several quarters could be volatile thanks to weakening economic growth rates around the world.
Demitri Kalogeropoulos has positions in Okta. The Motley Fool has positions in and recommends Okta. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.

Market data powered by Xignite.

source

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

ADVERTISEMENT

Popular

More like this
Related

IMF predicts global public debt will be at 93% of GDP by end of 2024

Global public debt will exceed US$100 trillion by the...

World Bank’s Banga says more bilateral debt forgiveness needed

World Bank President Ajay Banga said on Thursday (17...

Ghana, creditor panel agree on debt restructuring, paving way for IMF cash

Ghana has finalised a pact with its official creditor...

Nigeria strikes deal with Shell to supply $3.8 billion methanol project

Nigeria has struck a deal for Shell (SHEL.L), opens new...