Over the past six months, Okta’s shares (currently trading at $76.38) have posted a disappointing 18.4% loss while the S&P 500 was down 1.8%. This may have investors wondering how to approach the situation.
Is there a buying opportunity in Okta, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is Okta Not Exciting?
Despite the more favorable entry price, we're sitting this one out for now. Here are three reasons you should be careful with OKTA and a stock we'd rather own.
1. Weak Billings Point to Soft Demand
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Okta’s billings came in at $1.08 billion in Q4, and over the last four quarters, its year-on-year growth averaged 9.8%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Okta’s revenue to rise by 9%, a deceleration versus its 28.4% annualized growth for the past five years. This projection doesn't excite us and implies its products and services will face some demand challenges.
3. Cash Flow Margin Set to Decline
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Over the next year, analysts predict Okta’s cash conversion will slightly fall. Their consensus estimates imply its free cash flow margin of 29.6% for the last 12 months will decrease to 27.9%.
Final Judgment
Okta isn’t a terrible business, but it doesn’t pass our bar. Following the recent decline, the stock trades at 4.5× forward price-to-sales (or $76.38 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better investments elsewhere. We’d recommend looking at a top digital advertising platform riding the creator economy.
Stocks We Would Buy Instead of Okta
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
