As hackers become more sophisticated, businesses must upgrade their cybersecurity technology or risk imminent and potentially catastrophic data breaches. The need for cloud-based security applications is likely to grow exponentially, making Okta (NASDAQ:OKTA) stock a prime candidate for a medium- or long-term position.
Okta’s suite of identity-management tools are a cut above the rest because the company has embraced the zero-trust concept, which may already be superseding traditional security models. Focusing on a trustless approach to data breaches is a smart, forward-thinking business model — and Okta’s early stake in this domain could benefit clients and shareholders alike.
A New Approach to Security
Research firm Gartner estimated 2019’s global spending on cybersecurity to reach $124 billion, a figure that’s very likely to increase over time as stealing intellectual property, individual and corporate identities, and credit-card data remains a profitable albeit nefarious endeavor. Oftentimes, hackers will insert malware (sometimes known as ransomware) into businesses’ networks, thereby blocking them from their own data. After that, they’ll demand payment to let the businesses regain access to the data.
That’s already pretty shocking, but get ready for the real kicker: sometimes the culprit is a company insider. Thus, the traditional cybersecurity model — which focuses on keeping hackers out of a network while trusting the network’s insiders — might not be effective in this day and age. In other words, an old-school network firewall just doesn’t cut it anymore.
In contrast, the zero-trust approach is when everyone’s identity is verified regardless of whether they’re inside or outside of the network. No one is trusted because it’s assumed that a hacker would have already stolen someone’s identity or credentials and found a way past the firewall and into the network. Moreover, a zero-trust model means that no one should be given access to the entire network; rather, a participant is only granted access to specific areas on a need-to-know basis.
Bet on Okta, Not on Trust
It’s a shame that businesses can’t fully trust their own associates, but that’s the reality of the situation and security technology must reflect it. Indeed, as Bank of America analyst Tal Liani explains, the shift to trustless authentication marks a new paradigm in security tech: “We are entering a ‘zero-trust’ era in cybersecurity where everything must be authenticated, authorized and tracked.”
Similarly, Credit Suisse analyst Brad Zelnick views trustless tech as the wave of the future. Or, more accurately, a necessity of the present: “The modern world demands ‘zero trust’ approaches to security, which in turn are predicated on effective Identity and Access Management (IAM) to ensure every user and entity is permissioned, authenticated, and entitled per defined policies and constraints.”
Zelnick specifically names Okta as a pure-play vendor and a beneficiary in this burgeoning zero-trust movement, while Needham analyst Alex Henderson reminds us that the company is already well positioned on the cybersecurity-cloud axis: “We continue to believe that Okta is becoming the de facto leader in cloud identity and see identity as a crucial element of Zero Trust network architectures, which we view as the future of security.”
I tend to concur, and I’m encouraged by Okta’s recent announcement of cloud-architecture veteran Craig Weissman as the company’s new chief architect. Weissman brings over 20 years of experience in the field, including a nine-year stint working at Salesforce (NYSE:CRM), which he participated in the build-out of the company’s enterprise cloud platform.
The Final Word on Okta Stock
As I see it, Okta already secured the pole position in cloud-based identity-authentication architecture; now, it’s quickly earning a sizable market share in zero-trust security applications. Hence, it’s a no-brainer to assign Okta a “B” rating.
Even if we can’t always trust our associates, at least we can trust in the growth of this company.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
