The slump put shares in negative territory so far in 2021 while broader indexes set all-time highs.
Many growth stocks that had outperformed the market since the start of the pandemic fell last month, and Okta was caught up in that sell-off. Yet investors also had some concrete reasons to reevaluate their holding after the digital identity management specialist announced fourth-quarter results on March 3. That report showed no signs of a slowdown in its core business, but some on Wall Street were looking for a bolder 2021 outlook from the management team.
CEO Todd McKinnon and his team are calling for sales to rise about 30% this year after jumping 43% in 2020. Investors must balance that good news against the prospects for continued net losses as the software-as-a-service (SaaS) specialist works to scale up its business over the next few years. The pandemic created a more favorable selling environment, and Okta's strategy involves sacrificing short-term earnings and cash flow in hopes of capitalizing more fully on those tailwinds.