What happened
Shares of Okta (OKTA -0.89%) were bouncing back this week, recouping some of last week's losses after hacking group Lapsus$ revealed that it had gained access to a computer used by one of Okta's third-party engineers. Earlier this week, the company said in a filing that it didn't consider the incident to be material, and investors took advantage of the sell-off.
Through Thursday afternoon, the stock had gained 7.9% on the week.
Image source: Getty Images.
So what
Okta makes cloud identity software that allows employees and customers to seamlessly log in to and access the websites and applications they need. Given its business, customers rely on it for security, so it was troubling last week when Lapsus$ leaked screenshots from a computer used by an engineer working for Okta.
After the stock fell 21%, it rebounded on Monday when the company issued a Securities and Exchange Commission filing that explained the details of the incident, including that Lapsus$ had access to the engineer's computer for a five-day period in January. The potential impact of the breach was limited to the 366 Okta customers -- or 2.5% of the company's total -- that were accessed by the engineer during that period. Okta also explained that the support engineer does not have the ability to create or delete users or to access customer databases or source code. Support engineers can, however, reset passwords and multifactor authentication settings.
Okta concluded the disclosure by saying its service is fully operational and that it does not consider the incident to be material, which helped lift the stock on Monday. It continued to gain on Tuesday on a broad rally in tech stocks before pulling back over the last two sessions.
Now what
Details about the hack are still emerging, and it's unclear if there will be any repercussions for Okta as some customers have criticized the company for not acting sooner or providing more information.
However, the risks from the breach are likely more than reflected by the 21% sell-off last week, so it's not surprising that the stock is rebounding, especially as the company doesn't believe the incident will have a significant effect on its results.
Okta stock is now the cheapest it's been since 2018, at a price-to-sales ratio of 17, so there could be significant upside if the company can brush off the hack.
