San Francisco-headquartered, cloud-based security application provider Okta (NASDAQ:OKTA) bills itself as “the leading independent identity provider.” OKTA stock investors should be confident, knowing that the company provides its services to more than 10,000 organizations.
Now, I’ll be the first to admit that this isn’t the cheapest stock in the world. Indeed, some folks might say that it’s not worth the price of admission.
We’ll take a good, hard look at OKTA stock’s price action and valuation in a moment. Without a doubt, these are important considerations to bear in mind.
When all is said and done, however, you might find that the company’s ability to generate revenues makes the stock a worthy investment, even at an elevated price point.
A Closer Look at OKTA Stock
As of the afternoon of April 16, 2021, OKTA stock is valued at $268.17. That’s pretty amazing, considering that just a year earlier, the shares were available for around $140.
It’s likely that the onset of the novel coronavirus, and businesses’ subsequent focus on cloud-based applications and security, helped to propel the share price higher.
Even with the astounding rally, the share price isn’t at its peak. As recently as Feb. 12, 2021, the stock touched a 52-week high of $294.
Will OKTA stock make another run for $300? If you believe in the company – and I will attempt to build a bullish case here – then breaking through that resistance point shouldn’t seem impossible at all.
Just to be fair and balanced, though, I should mention that the company has -$2.09 in earnings per share on a trailing 12-month basis. Hopefully, this number will be pushed into positive territory at some point in 2021.
Great Expectations
When Okta recently reaffirmed its financial outlook for the first quarter of fiscal 2022 as well as full-year fiscal 2022, shareholders had plenty of reasons to celebrate.
For the first quarter of fiscal 2022, Okta has high expectations. In particular, the company expects revenues totaling $237 million to $239 million. This signifies a growth rate of 30% to 31% year-over-year.
The outlook remains quite positive when we include Okta’s expectations for full-year fiscal 2022. Specifically, the company forecasts total revenues of $1.08 billion to $1.09 billion. Results in that range would represent a year-over-year growth rate of 29% to 30%.
And if you’d like a broader view of the niche market in which Okta operates, check this out; Okta estimates that the identity market is valued at a whopping $55 billion.
Naturally, OKTA stock bulls will expect the company to expand its share of that market. And in support of that expectation, Okta has recently announced offerings addressing the identity governance niche as well as the privileged access product market.
A Shared Vision
If you need more evidence of Okta’s aggressive pursuit of the identity management field, a recently disclosed acquisition ought to convince you.
On Mar. 3, Okta revealed that the company has agreed to acquire Auth0, a leading identity platform for application teams.
Founded in 2013, Auth0 provides a platform that authenticates, authorizes and secures access for users, devices and applications.
Granted, Auth0 won’t be bought cheaply, as the all-stock acquisition transaction is valued at around $6.5 billion.
Yet, the business combination could offer tremendous long-term returns and it could potentially redefine the identity category as we know it.
Okta Co-founder and CEO Todd McKinnon evidently sees a synergistic effect in the merging of the two companies.
“Okta’s and Auth0’s shared vision for the identity market, rooted in customer success, will accelerate our innovation, opening up new ways for our customers to leverage identity to meet their business needs,” McKinnon explains.
The deal is expected to close during the second quarter of Okta’s fiscal-year 2022. So, investors will need to be patient and have faith that the benefits of the combined business will be considerable.
OKTA Stock: The Bottom Line
All in all, it’s safe to conclude that Okta is a bona fide leader among identity management firms. And, the Auth0 acquisition should only help to solidify Okta’s position in this niche.
The company’s fiscal outlook is optimistic – no doubt about that. But then, the identity market is growing quickly, and Okta’s foothold in that market is firm.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.