Okta (OKTA) stock forecast: Where next for identity platform?
Okta (NASDAQ: OKTA) is an Identity as a Service (IDaaS) firm, providing cloud-based authentication to its corporate subscribers. Okta’s technology allows employees to work securely from home, and provides a single sign-on service, letting customers access multiple services with just one login and password.
As the pandemic forced millions of employees to work from home, Okta’s total customers soared, almost doubling between the start of 2019 and second quarter of 2021.
In May 2021, the cloud software provider acquired fellow identity platform Auth0, and a number of high profile customers along with it.
But while the acquisition has increased scope for growth, it has also increased costs - and Okta is yet to report a profit. Third-quarter earnings per share (EPS) were negative at -$0.07, and seven analysts have lowered their price targets for Okta since Q3 results were announced.
The Okta stock value has fluctuated significantly since the start of 2021, after reaching a record high last February. Could 2022 see it hit an all-time high?
Okta stock price history and news
Okta made its stock market debut in April 2017, at $17.00 per share. The stock rose quickly, increasing to $30 by the start of 2018, and $130 by February 2020.
Though the pandemic would eventually see Okta’s customer numbers soar, the share price dropped by almost 30% in spring 2020 as Covid-19 uncertainty hit the markets. The rest of 2020 saw the Okta share price climbing and eventually reaching a record high of $291 on 12 February 2021.
Since then, the software provider’s has stock struggled through significant fluctuations, with price movements proving sensitive to both global and Okta stock-specific news. On 1 September, the announcement of positive second-quarter results saw the share price rise by around 3%. The share price also rose from $235.17 on 12 October to $259.92 a week later after Okta announced news about Okta Workflows at its Showcase21 event.
Mid-November saw volatility in the stock market, with the NASDAQ Composite Index dropping from 15,973.86 to 15,491.66 between 16 November and 24 November. Okta’s share price fell from $267 to $215 over the same period, a drop of almost 20%.
Okta stock analysis: Technical view
According to TradingView, the relative strength index (RSI) for Okta is currently neutral at 47, signalling the price is unlikely to see another upward breakout or price drop.
Overall, short-term technical analysis points to a bearish direction, with 11 indicators indicating a sell signal, ten indicators staying neutral and five giving a buy signal.
Okta stock update: Q3 results
Okta announced Q3 results on 1 December, reporting annual revenue growth of 61%. Okta also announced a $221m net loss, up from $73m in the same quarter a year earlier.
Nine analysts updated their ratings following these Q3 results, with seven reducing their price target. The share price wobbled as results were announced, and has sat around $212 since then (6 December).
Growing market
According to Okta’s estimations, the company has an ‘addressable market’ of $80bn. With forecasted 2021 revenues of $1.25bn, there is still huge scope for future growth. And analysts are bullish about Okta’s prospects as the pandemic recedes.
Happy customers
In another encouraging sign for future growth, Okta’s customers appear to be happy with the services it provides. Its dollar-based net retention rate is 122%, which means customers are not only renewing, but upgrading their Okta products.
The research and advisory firm Forrester rated Okta as the market leader based on the strengths of its current offering and strategy compared to the 11 top identity as a service (IDaaS) for enterprise providers.
Auth0 integration
In May 2021 Okta acquired Auth0, and along with it, a list of high-profile customers and the opportunity to ‘cross sell’ between the two businesses.
Rising costs, elusive profits
Yet this new acquisition also carries risks, particularly higher costs. The third quarter saw operating expenses increase 70% from a year ago, primarily due to the inclusion of Auth0.
Overall operating expenses were $439m, up from $212m a year earlier, driven by higher marketing and R&D costs. As an early-stage, high-growth company, Auth0 does not expect to make profits for some time.
Equity analysts at Morningstar do not expect Okta to swing into profits even under bull-case assumptions until 2024.
Okta share price forecast
According to data from MarketBeat, analysts rate Okta stock as a consensus ‘buy’, with one ‘strong buy’ rating, 18 ‘buy’ ratings, and five ‘hold’ recommendations.
Okta share price targets for the next twelve months range from $230 to $320, with an average price target consensus of $284.96.
After strong second-quarter results were announced on 1 September 2021, six analysts boosted their Okta stock price targets, with Jonathan Ho at William Blair reiterating his ‘outperform’ rating.
Berenberg Bank reported the most bullish Okta stock forecast, increasing its price target from $290 to $310, representing a 17% upside on the report date share price, and an all-time high for the Okta stock.
Since third-quarter results were released on 1 December 2021, analysts have become increasingly bearish. Nine analysts updated their ratings in the days following the earnings release, with seven of them lowering their price forecasts.
JP Morgan lowered its Okta price target from $295 to $230, giving the stock a ‘neutral’ recommendation. Analysts at Robert W Baird also downgraded Okta stock from a ‘positive’ to ‘neutral’ rating, and reduced their price target from $265 to $230.
Not all analysts reacted to the latest results with pessimism, though. Alex Henderson at Needham reiterated a ‘buy’ rating for Okta stock, and maintained a $320 price target - a 61.55% upside on the report date.
Rob Owens at Piper Sandler also upgraded Okta stock from ‘neutral’ to ‘overweight’, increasing the share price target from $250 to $270.
Note that analysts’ forecasts can be wrong, and shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you cannot afford to lose.
Longer term growth forecasts (2021-2026)
Analysts rarely provide longer term forecasts, but the algorithm-based service WalletInvestor uses historical price movements to predict future prices years into the future.
According to WalletInvestor’s Okta stock price forecast, the stock could reach $225 by the start of 2022, fluctuating over the course of the year and sitting at $239 in January 2023.
The share price is predicted to pass $250 in December 2023, and climb to $263 by December 2024.
WalletInvestor’s Okta share price predictions see the stock price continuing to grow over the course of 2025 and 2026, but with considerable fluctuations.
According to its outlook, the share price will pass $275 in December 2025 and hit a record high of $299 in September 2026.
Note that algorithm-based predictions are often wrong and past performance cannot guarantee future results. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you can't afford to lose.
FAQs
Is Okta a good stock to buy?
According to MarketBeat, analysts have rated Okta stock a consensus ‘buy’. Analysts have given Okta one ‘strong buy’ rating, 18 ‘buy’ ratings, and five ‘hold’ recommendations.
Note that analyst predictions are often wrong. Forecasts shouldn't be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you cannot afford to lose.
Okta stock: buy, sell or hold?
Data from MarketBeat shows that analysts rate Okta stock a consensus ‘buy’. Of the 24 analyst ratings reported, one was a ‘strong buy’ rating, 18 were ‘buy' ratings and five were ‘hold’ recommendations.
Note that analyst predictions are often wrong. Forecasts shouldn't be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Will Okta stock go up?
According to data from MarketBeat, the analyst price target consensus is $284.96. However, out of the nine analysts who have covered the Okta stock since its latest earnings release, seven have lowered their price targets for the stock.
Note that analyst predictions are often wrong. Forecasts shouldn't be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you cannot afford to lose.
Why has Okta stock been going down?
The Okta share price reached a record high of $291 on 12 February 2021. Since then the stock price has fluctuated significantly in response to results releases and general market movements.
Note that analyst predictions are often wrong. Forecasts shouldn't be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you cannot afford to lose.