Buy or Sell Okta Stock?

Okta (OKTA) stock has jumped 11% during the past day, and is currently trading at $79.65. We believe there is not much to fear in OKTA stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced.

Below is our assessment:

Don’t get too attached to OKTA stock, even if you love it. Stocks crash. High Quality Portfolio lets you navigate that risk.

Let’s get into details of each of the assessed factors but before that, for quick background: With $14 Bil in market cap, Okta provides identity solutions and a cloud platform offering directory services and authentication products to enterprises, businesses, universities, non-profits, and government agencies globally.

[1] Valuation Looks High

This table highlights how OKTA is valued vs broader market. For more details see: OKTA Valuation Ratios

[2] Growth Is Strong

• Okta has seen its top line grow at an average rate of 18.1% over the last 3 years
• Its revenues have grown 12% from $2.5 Bil to $2.8 Bil in the last 12 months
• Also, its quarterly revenues grew 11.6% to $742 Mil in the most recent quarter from $665 Mil a year ago.

This table highlights how OKTA is growing vs broader market. For more details see: OKTA Revenue Comparison

[3] Profitability Appears Moderate

• OKTA last 12 month operating income was $122 Mil representing operating margin of 4.3%
• With cash flow margin of 32.1%, it generated nearly $912 Mil in operating cash flow over this period
• For the same period, OKTA generated nearly $195 Mil in net income, suggesting net margin of about 6.9%

This table highlights how OKTA profitability vs broader market. For more details see: OKTA Operating Income Comparison

[4] Financial Stability Looks Very Strong

• OKTA Debt was $423 Mil at the end of the most recent quarter, while its current Market Cap is $14 Bil. This implies Debt-to-Equity Ratio of 3.0%
• OKTA Cash (including cash equivalents) makes up $2.5 Bil of $9.2 Bil in total Assets. This yields a Cash-to-Assets Ratio of 26.7%

[5] Downturn Resilience Is Weak

OKTA has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• OKTA stock fell 84.6% from a high of $291.78 on 12 February 2021 to $45.02 on 4 November 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $127.30 on 18 May 2025 , and currently trades at $79.65

 
2020 Covid Pandemic

• OKTA stock fell 31.1% from a high of $139.50 on 19 February 2020 to $96.08 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 14 April 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read OKTA Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.