The last three months have been tough on Okta, Inc. (NASDAQ:OKTA) shareholders, who have seen the share price decline a rather worrying 32%. But don't let that distract from the very nice return generated over three years. To wit, the share price did better than an index fund, climbing 96% during that period.
Although Okta has shed US$4.2b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
Given that Okta didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Okta's revenue trended up 37% each year over three years. That's well above most pre-profit companies. The share price rise of 25% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. So now might be the perfect time to put Okta on your radar. If the company is trending towards profitability then it could be very interesting.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Okta is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Okta will earn in the future (free analyst consensus estimates)
A Different Perspective
The last twelve months weren't great for Okta shares, which cost holders 43%, while the market was up about 1.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Investors are up over three years, booking 25% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. It's always interesting to track share price performance over the longer term. But to understand Okta better, we need to consider many other factors. For example, we've discovered 3 warning signs for Okta that you should be aware of before investing here.
Of course Okta may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.