Okta Inc (NASDAQ:OKTA) Faces Investor Skepticism Despite Strong Financials

• Adam Borg from Stifel Nicolaus sets a price target of $130 for Okta Inc (NASDAQ:OKTA), indicating a potential upside of 23.52%.
• Okta surpasses earnings and revenue estimates with $0.86 per share and $688 million in revenue, respectively.
• The stock declines by 14.6% due to concerns over the discrepancy between adjusted and GAAP earnings and conservative future guidance.

Okta Inc (NASDAQ:OKTA), a leading entity in the cybersecurity sector, offers advanced identity and access management solutions. The company ensures secure access to applications and devices for organizations globally. As of May 28, 2025, Adam Borg from Stifel Nicolaus has set a price target of $130 for Okta, suggesting a potential upside of about 23.52% from its current trading price of $105.25.

Despite Okta's robust financial performance in the first quarter, the company's future outlook did not align with investor expectations. Okta reported earnings of $0.86 per share, beating Wall Street's estimate of $0.77, and achieved a revenue of $688 million, surpassing the consensus estimate of $680.1 million. However, the stock experienced a significant decline, dropping 14.6% by noon ET on Wednesday.

The gap between Okta's adjusted earnings and GAAP earnings might have contributed to the stock's decline. While adjusted earnings were $0.86 per share, GAAP earnings were significantly lower at $0.35 per share. This marked an improvement from the previous year's Q1 loss of $0.24 per share, but the difference between adjusted and GAAP figures raised concerns among investors.

Okta's revenue grew by 12%, and the company reported positive free cash flow of $238 million, in line with revenue growth. Subscription revenue also increased by 12% to $673 million. Despite these positive results, Okta's shares fell by over 13% due to the company's cautious outlook and conservative guidance amid macroeconomic uncertainty.

Analysts from Jefferies described Okta's quarterly performance as "good, short of great expectations." The company's Current Remaining Performance Obligations (cRPO) increased to $2.23 billion, showing a 14% year-over-year growth, but still fell short of the "elevated" investor expectations of around 15%. As of now, Okta's stock price is $105.23, reflecting a decrease of 16.16% from its previous high.