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3 Reasons the Okta Stock Drop Doesn’t Matter

Shares of Okta fell during September in spite of broader market gains

Founded in 2009, Okta (NASDAQ:OKTA) is an identity management software company. The Okta Identity Platform allows companies of all sizes to track how their employees access and use cloud-based applications. 

3 Big Reasons Now Is the Time to Buy the Dip in Okta Stock
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There is a huge demand for this type of service as businesses increasingly move to the cloud. Okta competes with companies like Microsoft (NASDAQ:MSFT), but its the leader in this industry by far. The company has done a good job of bringing on new customers while continuing to strengthen its relationships with current customers. 

The company has seen steady growth since going public in April 2017. At the end of July, the company hit a 52-week high of $141.85. But in the months since, the stock has declined sharply due to a number of recent headwinds. 

Here are three reasons investors shouldn’t get too concerned about the recent OKTA stock drop.

Okta Continues to Onboard High-Value Customers

Okta continues to experience impressive growth quarter after quarter, largely thanks to its ability to onboard new high-value customers. During its most recent quarter, its subscription revenue grew by more than 50%. 

The company also added 450 new customers, bringing its total customer count to over 7,000. And many of Okta’s customers pay over $100,000 for their annual subscriptions. In fact, Okta owes the majority of its growth to its top 20 customers, which doubled over the past year. 

The Company Is Investing Back in Its Business

Okta is still a relatively new company and it’s in the early stages of its growth. So the company has experienced a number of losses as it continues to invest back into its business. This isn’t unusual for a new company, since growth is often prioritized over profitability. 

For instance, Okta stock has been investing heavily in hiring over the past year. The company’s headcount increased 40% in the first half of 2019 and investors can count on seeing more growth during the remainder of the year. 

OKTA Continues to Up the Ante

And finally, investors should be encouraged by how quickly Okta continues to grow. During the company’s most recent quarter, its sales increased by 49% to reach $141 million. And not only does the company continue to add new customers every quarter, the size of these contracts continues to increase. 

And the company continues to up the ante for itself quarter after quarter. It sets aggressive sales goals for itself and always seeks to outdo its own guidance. During the most recent earnings report, the company increased its fiscal-year guidance to between $560 million and $563 million. At the beginning of the year, the company’s full-year guidance was between $530 million and $535 million.

So investors shouldn’t get too concerned about the stock’s September lull. The company has a number of strong tailwinds to propel it forward in the coming years.  

As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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