Okta, Inc. is a San Francisco-based company that helps customers securely connect to technology in a seamless, timely and secure manner. Okta debuted on the Nasdaq Composite (Nasdaq: OKTA) on April 7, 2017, at $17 per share. The company’s stock has had an upward trajectory ever since, growing in value by about 650%.
The fuel behind Okta’s continued momentum appears to be the rapid growth of cloud computing and its growing, large customer base. The company believes its products uniquely address the security issues facing the marketplace while leading the charge away from legacy identity management.
Okta views technological advances as an ever-changing landscape that presents both opportunity and potential peril. The company’s independent, cloud-based platform addresses the inherent challenges by ensuring customers can connect to technology at their leisure.
Buying Okta stock — or any company’s stock — is not a difficult or secret process, nor is it reserved only for the most experienced investor. It’s a straightforward process that gives an advantage to the best informed. Read on to learn more about Okta and see if it’s right for your investment goals.
Okta Stock Price and Company History
Okta is a necessary company in the age of technology. Our reliance on computers and the importance they play in our lives brings an expectation of trust between users and technology. Okta understood this concept, prompting its founders, Todd McKinnon and Frederic Kerrest, to pioneer a cloud computing platform called the Okta Identity Cloud. The Okta Identity Cloud equips users with the ability to reliably connect with technology, regardless of the device.
As its name suggests, it’s a cloud-based platform that securely connects users to the tools they need. Organizations of all sizes around the globe use Okta as the benefits of cloud usage — its convenience and feasibility — become widely known and used. And organizations’ growing dependence on cloud applications makes security a huge component in today’s world.
Okta’s products include a workforce identity platform in which companies can secure access for their entire business. Its products also include a customer identity platform that empowers companies to grant or deny access.
The company’s growth is in line with the growth trend seen in the marketplace, as organizations look to engage more with cloud-based applications. Okta has grown rapidly since McKinnon and Kerrest launched the company in 2009. By October 2016, the company grew to 2,900 customers. Today, it boasts 7,000 customers. The company’s revenue has grown accordingly. In the fiscal year 2016, Okta had revenue totaling $85.9 million. By the fiscal year 2019, that number ballooned 365% to $399 million.
The company’s initial public offering (IPO) was on April 7, 2017, at a cost of $17 per share. Much like its revenue, Okta’s stock has had a similar ascending trend. Since its first day trading when its stock closed at $23.51 per share — a 38% gain — Okta has maintained momentum. As of early September 2019, its stock has increased by about 650% to $127.94 per share.
Okta’s most recent quarterly earnings report from August 2019 shows the following:
- Total revenue grew by 49%
- Subscription revenue grew by 51%
- Calculated billings grew by 42%
- 450 new customers added
Future Outlook For Okta
The reliance on cloud computing represents tremendous growth potential for tech companies. As the numbers above indicate, Okta’s future looks bright.
What also brings optimism to those who follow Otka closely is the number of large companies added to its customer list. Customers with annual contract values greater than $100,000 increased in the most recent quarter. Okta now has more than 1,200 customers with annual contract values greater than $100,000. The expansion of these big-number contracts is indicative of Okta’s future growth potential.
The company also identifies 6 key elements to fuel its future growth:
- Drive new customer growth.
- Deepen relationships with existing customer base.
- Expand its international footprint.
- Expand integrations and partner ecosystems.
- Innovate and advance its platform with new products and use cases.
- Leverage its unique data assets with powerful analytics.
The Case for Buying Okta Stock
Even the most casual review of Okta’s stock performance garners your immediate attention. Okta’s upward-pointing trend line isn’t the only thing going in its favor. Here are several other reasons why you should give Okta a serious look.
A Growing Industry
Businesses in every sector and of all sizes around the world are increasingly relying on cloud-first strategies. This ongoing modification of how organizations conduct business is fueling tremendous growth in the industry, and Okta believes it is strategically positioned to take part in this burgeoning expansion.
Company Expansion
Technology blurs the world’s borders, bringing us all closer together in a seamless, virtual environment. Okta aims to expand its international footprint by strategically positioning its identity management products as the go-to platform for enhanced security and compliance and increased efficiency — all supported by superior cloud architecture.
Innovative New Products
Technological advances stimulate business growth. The most effective companies are perpetually developing and tweaking new ideas aimed at improving customer efficiency, productivity and profitability. Okta will continue its quest to add practical tools and new products to its platform so that customers are properly equipped.
A Strong Industry
Like Okta, many of its competitors are also reporting solid earnings numbers. This gives credence to the notion of an expanding industry, while also positioning Okta as a solid investment option.
Okta Stock: What to Consider Before Buying
Risk factors exist with all stock purchases. Here are a few things you should be mindful of prior to purchasing Okta stock.
Competitive Market
Okta faces stiff competition from larger, well established companies with immediate name recognition. Okta executives also acknowledge that they lack the resources to maintain or improve their competitive position.
Lack of an Established History
The company’s brief history makes it difficult to forecast long-term revenue projections and business viability in the future.
Rapid Growth of Okta Stock
While not an obvious risk factor, the speedy escalation of Okta’s stock must not be viewed as indicative of future growth. The company anticipates an increase in its operating costs as the company grows and acknowledges the possibility of being unable to generate revenue to achieve and maintain profitability.
Membership-Dependent Business Model
Customers renewing their subscriptions to Okta products is vital to the company’s bottom line. Any discernible customer attrition would adversely affect the company.
The Process for Buying Okta Stock
Buying Otka stock — or any company’s stock — is not a difficult task. To those uninitiated in the process, however, it can seem like a grueling and complicated task. The steps below are simple, and any investor at any skill level can follow them with ease. For further clarity, the process is similar to the steps involved in purchasing Nintendo stock.
- Conduct your research.
Vast amounts of information about the stock market and specific stocks are available. Even if you choose to work with an experienced broker (more on that below), it’s important that you educate yourself in the inner-workings of how to invest. There are several online options you can choose from and learn at your own pace. Your research should include how you plan to go about investing.
- Choose a broker.
Some investors choose to go about it alone, using online brokers to manage their transactions. Others prefer one-on-one interaction and relationship-building from full-service investment firms. There’s no right or wrong answer. And while each has its pros and cons, it’s about personal preference and what suits you as an investor. Choose wisely.
- Establish and build a relationship with a broker.
This is a critical step toward building the kind of investment portfolio that fits your needs. It’s important because it allows you to build trust with your broker. And it allows them to become familiar with your goals and suggest the kinds of investment vehicles to get you there. Always remember that the brokers work for you and that you make the ultimate decision.
- Fund an account.
Interested in an online brokerage? Create an account and link your banking information to transfer funds or wire money into the account. Either way, once you deposit the funds, you’re ready to start trading.
- Finalize your Okta stock purchase.
Okta trades on the Nasdaq under the symbol: OKTA. You’re now ready to purchase Okta stock at the current per-share price, less any fees or related costs using either your online or your neighborhood broker.
Best Brokers for Okta Stock
A Solid Investment
Investors who backed Okta from the start have realized incredible gains over the past 2½ years. The company’s 650% gain since its IPO is a solid reminder that companies that come along at the right place, at the right time with the right idea can make a tremendous difference to an investor’s portfolio.
But understanding Okta’s stock performance means understanding the delicate balance between choosing to invest in what has been a success stock, or staying away because you believe it has peaked. It makes the personal research component mentioned above all the more critical. Even if you decide to work with a full-service investment firm, and you and your broker analyze charts and graphs and pore over earnings reports, it still would not guarantee what Okta’s stock would perform.
It’s important to weigh the risks and benefits of purchasing this stock while also ensuring it aligns with your investment goals. Are you interested in a long-term investment vehicle? Short term investment vehicle? What’s the company’s earning potential? It’s important to have a clear understanding of these questions before ultimately making a decision.
Okta stock has maintained relevance and tremendous profitability despite being part of an industry filled with competition from companies big and small. Its processes are unique and its products are in demand, opening the door for what appears to be, at least in the short term, a fairly solid investment.