Please ensure Javascript is enabled for purposes of website accessibility

Why Okta's Shares Dropped 7.5% on Wednesday

By Travis Hoium - Mar 3, 2021 at 1:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A tech sell-off has hit Okta hard today.

What happened 

Shares of online identity company Okta (OKTA 6.17%) dropped as much as 7.5% ahead of the company's earnings report. Shares are down 7.3% at 2:20 p.m. EST and are bouncing near the lows of the day. 

So what 

It's a little strange that Okta's shares are down this much ahead of earnings. Growth-oriented tech stocks have taken it on the chin in general today, so that could be part of the move. Sometimes a "whisper number" hits Wall Street, where someone gets word of whether or not a stock will hit earnings estimates ahead of earnings. 

Finger print on a chip representing security.

Image source: Getty Images.

Wall Street analysts are expecting $221.9 million in revenue and a loss of $0.01 per share. And estimates for 2022 are for $1.07 billion in revenue and a penny in earnings, so look for any information about what results will look like, even though many companies haven't given guidance this year. 

Now what 

I wouldn't read too much into today's move because tech stocks are down big and earnings will be out this afternoon. Investors' focus should really be on the company's financial results and in particular revenue growth and earnings trajectory. If Okta can begin reporting a profit it'll be a good sign for the company, especially if the top-line momentum continues. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Okta Stock Quote
Okta
OKTA
$95.98 (6.17%) $5.58

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.