Okta (OKTA) Stock Trades Down, Here Is Why
Also fiscal Q2 cRPO (current Remaining performance indicator - leading growth indicator) was guided below expectations and implied continued growth deceleration.
On a more positive note, revenue and adjusted EPS both beat, which is a good start. Typically, beats flow through to an increase in the full-year guidance.
The company also stated that they are "now factoring in potential risks related to the uncertain economic environment for the remainder of" the year.
Cybersecurity had been a strong performer as the market saw the sector as recession resistant and largely unaffected by tariffs. Overall, the quarter was underwhelming as expectations were likely high heading into the print.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Okta? Access our full analysis report here, it's free.
Okta's shares are somewhat volatile and have had 12 moves greater than 5% over the last year. But moves this big are rare even for Okta and indicate this news significantly impacted the market's perception of the business.
The previous big move we wrote about was 29 days ago when the stock gained 8.9% on the news that S&P Dow Jones Indices announced the company would be added to the S&P MidCap 400 before trading opens on Thursday, May 1, 2025.
Being included in the index means that Okta will likely be held by many mutual funds and ETFs, which could potentially drive up demand for the stock. We note that while buying of the stock could increase, this development does not change the fundamentals of the company. Revenue growth, expense efficiency, and capital intensity of the business, for instance, are not impacted by index inclusion or exclusion, so this is more of a technical tailwind for the stock.
Okta is up 36.4% since the beginning of the year, but at $107.53 per share, it is still trading 15.5% below its 52-week high of $127.30 from May 2025. Investors who bought $1,000 worth of Okta's shares 5 years ago would now be looking at an investment worth $584.66.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
3 hours ago
- Miami Herald
Why did stocks tumble this week?
The stock market had a tough week, with the S&P 500 and tech-stock-heavy Nasdaq retreating sharply on Thursday and Friday following a batch of concerning news on inflation, jobs, and tariffs. The S&P 500 fell 2.7% from an early-week high while the Nasdaq lost 3.9% of its value from its peak on Thursday. Here's why stocks retreated, and what could happen next. The stock market sell-off began in earnest following the Federal Reserve's controversial decision to keep interest rates at 4.25% to 4.5%. President Trump has advocated for Fed Chairman Jerome Powell to cut rates aggressively, recommending a 3% reduction. Related: Goldman Sachs revamps Fed interest rate cut forecast for 2025 Lower interest rates support stock prices because they increase household and business spending, fueling revenue and profit growth. Powell's reluctance to lower rates remains a headwind for stocks this year. Powell cited risks of tariffs driving inflation higher later this year and a "solid" economy for the decision to leave rates unchanged. Many viewed his hawkish tone during his press conference as an indication that rates may not get cut at the next meeting in September either. The decision drew the ire of President Donald Trump, who has previously called Chairman Powell "Mr. Too Late" and a "numbskull" for not already reducing interest rates. The President renewed his calls for Powell to resign following the Fed meeting. Despite White House pressure, the Fed's dual mandate targets low unemployment and inflation, which dictates its decisions on monetary policy. The Fed's mandate purposefully excludes political jawboning. Unfortunately, the Fed's dual goals are contradictory. While Fed rate cuts boost economic activity and lower unemployment, they increase inflation. The opposite is true when it raises rates. This dynamic often means that the Fed hesitates for fear of causing more economic problems than it solves. Unfortunately, that often means that the Fed falls behind the curve when setting interest rates at appropriate levels, forcing it to act more aggressively than it might otherwise because the economy has gotten too hot or cold. That chasing can lead to greater uncertainty, causing stock market volatility. The stock market's sell-off earlier in 2025 was primarily due to higher-than-expected import tariffs and the risk that they would boost inflation, zapping economic activity. Those worries fell when President Trump paused many tariffs on April 9, kickstarting a massive stock market rally that sent the S&P 500 and Nasdaq up over 28% and 38%, respectively. More Layoffs: Intel's recent layoffs take an unexpected turnWalmart makes more cuts customers won't likeLooking for a job? Job ads probably won't help you find one However, now that President Trump's tariff pause expired on August 1, he's announced new tariffs ranging from 10% to 41%, including a 35% tariff on Canada, up from 25%. Canada was our third-largest trading partner in 2024. The higher tariffs are problematic, given that they occur even as the impact of tariffs left in place earlier this year seems to be increasing inflation. The Personal Consumption Expenditures index showed inflation increased to 2.6% in June, up from 2.4% in May and 2.2% in April. The higher and faster inflation rises, the more likely business and household spending will shrink, dinging corporate revenue and earnings growth at publicly traded companies. The stock market was also hit by disappointing jobs data. Stocks perform best when the economy creates more jobs and wages grow, creating extra discretionary income. Related: Jobs report shocker resets Fed interest rate cut bets On Friday, the Bureau of Labor Statistics said the US economy only added 73,000 jobs in July, far fewer than the 100,000 expected and 147,000 in June. As a result, the unemployment rate increased to 4.24%, its highest level this cycle. Meanwhile, the Job Openings and Labor Turnover Survey (JOLTS) showed the number of open jobs fell to 7.4 million in June from 7.7 million in May. In case that wasn't concerning enough, Challenger, Gray & Christmas reported that US employers announced 62,075 layoffs in July, up 29% from June and 140% year over year. Stocks have had a remarkable rally, and it's not shocking that they might take a break. August is a notoriously weak month for stock market returns, and recent gains have lifted the S&P 500's forward price-to-earnings ratio, a key valuation measure, to lofty levels. According to FactSet, the S&P 500's forward P/E ratio was 22.4 on Friday, near the highs set in February before tariff announcements caused a sell-off, and up from about 19 in April, when stocks were near the lows. With valuation arguably rich and inflation and jobs uncertainty growing, stocks could experience more volatility than usual this month. Long-term investors are likely best off simply recognizing that pullbacks are common. According to Capital Group, a money manager with $2.2 trillion under management, the S&P 500 retreats 5% to 10% about once per year. Short-term investors may want to take a different approach, locking in recent gains and looking for lower entry points in the coming weeks. Related: Morgan Stanley resets S&P 500 target for 2026 The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
6 hours ago
- Yahoo
Some strategists see a stock-market bubble brewing — and it's not the Magnificent 7's fault this time
Stock valuations are rising. Rather than the Mag Seven, look at the "Terrific 20." The Terrific 20 stocks includes diverse sectors, indicating a broadening market beyond Big Tech. But some warn of "speculative fervor," given that price multiples, not earnings, are on the rise. Stock valuations are getting frothy again, but this time, it's not all Big Tech's fault. Yes, valuations of the Magnificent Seven stocks — Apple, Amazon, Microsoft, Meta, Alphabet, Nvidia, and Tesla — are back up after since bottoming in April. Yet, the group's 12-month forward price-to-earnings ratio is still down from mid-2024, mid-2023, and 2020 levels. Meanwhile, forward PE ratios on the next 20 stocks in the S&P 500 continue to surge, topping levels seen earlier this year. Their valuations are also higher than at any point over the last decade. Arun Sai, a senior multi-asset strategist at Pictet Asset Management, calls the group the "Terrific 20." Some may see the rising forward expectations for a widening number of stocks as a sign of health, as the rally extends beyond just the most popular stocks. But when stocks rise because of multiple expansion instead of earnings growth, it may be a sign that investor sentiment is becoming overheated. "These companies span a broad set of sectors more closely tied to the real economy, including financials, energy, industrials, consumer, and legacy tech," Sai wrote on Tuesday. "Names like Broadcom, Walmart, JPMorgan, Berkshire Hathaway, Visa, and GE Aerospace now account for ~17% of the MSCI US index, compared to 33% for the Mag 7." "Broader participation is a positive — when it's driven by earnings," he continued. "But when more of the market gets expensive, the narrative that 'US equities aren't overpriced, just a few exceptional companies are' becomes harder to justify." Sai compared the current environment to the so-called "Nifty Fifty" bubble in the 1960s. Richard Bernstein, the founder of Richard Bernstein Advisors and former chief investment strategist at Merrill Lynch, said in June that there are parallels to another famous episode of euphoria—the dot-com bubble of 2000—as the market seems solely focused on an emerging technology. On Wednesday, Bernstein reiterated his skepticism of the rally, noting that the market is still relatively concentrated even if valuations are surging among more than just the top seven stocks. Trading of leveraged ETFs, zero-day options, and low dollar-value stocks is also picking back up, signs of excess optimism, he said. "If you're a trader, I think you should take a deep breath and kind of look at what's going on and realize that everybody's in this huge speculative fervor," Bernstein told Business Insider. "But if you're an investor and you want to be a little patient, I don't think it gets much better than this." "The reckless abandon is going to leave you with so many opportunities," he continued. "It's going to be like post-2000." Most Wall Street strategists don't see a dramatic pullback ahead, and few have made direct comparisons to prior bubble episodes. In recent days, however, some have extended quiet warnings to investors about the market's near-term direction. Ulrike Hoffmann-Burchardi, CIO Americas and global head of equities at UBS Global Wealth Management, said in a note on Tuesday that "investors should be mindful of potential market swings in the coming weeks," and that "capital preservation or phasing-in strategies can be effective in navigating near-term volatility." While valuations are no doubt extended, there's no guarantee a major market top is near, and the AI trade may have room to run as the technology evolves. Meta and Microsoft, for example, reported strong earnings beats this week and gave positive forward guidance, causing shares to soar. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
7 hours ago
- Yahoo
Some strategists see a stock-market bubble brewing — and it's not the Magnificent 7's fault this time
Stock valuations are rising. Rather than the Mag Seven, look at the "Terrific 20." The Terrific 20 stocks includes diverse sectors, indicating a broadening market beyond Big Tech. But some warn of "speculative fervor," given that price multiples, not earnings, are on the rise. Stock valuations are getting frothy again, but this time, it's not all Big Tech's fault. Yes, valuations of the Magnificent Seven stocks — Apple, Amazon, Microsoft, Meta, Alphabet, Nvidia, and Tesla — are back up after since bottoming in April. Yet, the group's 12-month forward price-to-earnings ratio is still down from mid-2024, mid-2023, and 2020 levels. Meanwhile, forward PE ratios on the next 20 stocks in the S&P 500 continue to surge, topping levels seen earlier this year. Their valuations are also higher than at any point over the last decade. Arun Sai, a senior multi-asset strategist at Pictet Asset Management, calls the group the "Terrific 20." Some may see the rising forward expectations for a widening number of stocks as a sign of health, as the rally extends beyond just the most popular stocks. But when stocks rise because of multiple expansion instead of earnings growth, it may be a sign that investor sentiment is becoming overheated. "These companies span a broad set of sectors more closely tied to the real economy, including financials, energy, industrials, consumer, and legacy tech," Sai wrote on Tuesday. "Names like Broadcom, Walmart, JPMorgan, Berkshire Hathaway, Visa, and GE Aerospace now account for ~17% of the MSCI US index, compared to 33% for the Mag 7." "Broader participation is a positive — when it's driven by earnings," he continued. "But when more of the market gets expensive, the narrative that 'US equities aren't overpriced, just a few exceptional companies are' becomes harder to justify." Sai compared the current environment to the so-called "Nifty Fifty" bubble in the 1960s. Richard Bernstein, the founder of Richard Bernstein Advisors and former chief investment strategist at Merrill Lynch, said in June that there are parallels to another famous episode of euphoria—the dot-com bubble of 2000—as the market seems solely focused on an emerging technology. On Wednesday, Bernstein reiterated his skepticism of the rally, noting that the market is still relatively concentrated even if valuations are surging among more than just the top seven stocks. Trading of leveraged ETFs, zero-day options, and low dollar-value stocks is also picking back up, signs of excess optimism, he said. "If you're a trader, I think you should take a deep breath and kind of look at what's going on and realize that everybody's in this huge speculative fervor," Bernstein told Business Insider. "But if you're an investor and you want to be a little patient, I don't think it gets much better than this." "The reckless abandon is going to leave you with so many opportunities," he continued. "It's going to be like post-2000." Most Wall Street strategists don't see a dramatic pullback ahead, and few have made direct comparisons to prior bubble episodes. In recent days, however, some have extended quiet warnings to investors about the market's near-term direction. Ulrike Hoffmann-Burchardi, CIO Americas and global head of equities at UBS Global Wealth Management, said in a note on Tuesday that "investors should be mindful of potential market swings in the coming weeks," and that "capital preservation or phasing-in strategies can be effective in navigating near-term volatility." While valuations are no doubt extended, there's no guarantee a major market top is near, and the AI trade may have room to run as the technology evolves. Meta and Microsoft, for example, reported strong earnings beats this week and gave positive forward guidance, causing shares to soar. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
