OKTA · Okta
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $226.07
Note written ·
Price against the kill line
19.1% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $226.07, on record since 11 November 2026. The shares are up 27.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $226.07, the 27 October 2026 close, which would show the shares leading the S&P 500 and prove this call wrong. A Q3 FY27 cRPO growth figure above the 12% top of the guide, together with a raised FY27 revenue outlook, would also prove it wrong.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Technology
Quarter to 31 July 2026, filed 27 August 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 805
- Revenue, change on a year (%)
- +10.6
- Gross margin (%)
- 79.6
- Operating margin (%)
- 13.3
- Free cash flow, four quarters ($M)
- 979
- Price to earnings (×)
- 110.5
- Free-cash-flow yield (%)
- 3.0
All filed numbers
What Okta reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 805 | +10.6 | 79.6 | 13.3 |
| first filed | 765 | +11.2 | 77.8 | 7.3 |
| first filed | 761 | +11.6 | 77.9 | 6.0 |
| first filed | 742 | +11.6 | 77.1 | 3.1 |
| first filed | 728 | +12.7 | 76.9 | 5.6 |
| first filed | 688 | +11.5 | 77.5 | 5.7 |
| Pre-tax income ($M) | 126 |
| Net income ($M) four quarters: 296 | 116 |
| Diluted shares, change on a year (%) against the quarter to 31 July 2025 | −1.2 |
| Operating cash flow ($M) | 987 |
| Capital spending ($M) | 8.0 |
| Free cash flow ($M) | 979 |
| Cash and short-term investments ($M) | 2,299 |
| Debt ($M) | Not available |
| Net cash, cash less debt ($M) | Not available |
| Deferred revenue ($M) +13.2% on a year | 1,781 |
| Backlog, orders not yet delivered ($M) +17.0% on a year | 4,858 |
| Receivables ($M) | 469 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 6,973 |
| Market value ($M) | 32,699 |
| Enterprise value, market value plus net debt ($M) | Not available |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | 110.5 |
| Price to book value (×) | 4.7 |
| Free-cash-flow yield (%) | 3.0 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.9% of shares outstanding sold short, 2.4 days of average trading to cover, −12.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $27.1M |
| 12 monthsfrom | $267K | $58.1M |
The thesis
Okta's shares are more likely to lag than lead the S&P 500 through the fiscal 2027 third-quarter (Q3 FY27) report on 1 December 2026. Buying tied to the index addition is over, and no reported figure yet shows artificial-intelligence (AI) agent products lifting contracted revenue. The report decides it. It tests growth in current remaining performance obligations (cRPO), the contracted revenue due within 12 months, against the company's 11–12% guide.
Okta joined the S&P 500 before the open on 4 November 2026, according to S&P Dow Jones Indices. The shares closed at $191.05 that day and at $171.16 on 5 November 2026. 24/7 Wall St. linked the 5 November 2026 drop to selling of the year's AI software winners after Democrats won both chambers of Congress in the 3 November 2026 midterms. The stock has since recovered to $182.25 on 11 November 2026, with no company results in between.
At the price, the market already assumes the third quarter beats expectations. On 29 October 2026, CNBC reported that the shares had risen from $163 to $222 since the August report, valuing them at about 57 times the midpoint of the fiscal 2027 adjusted earnings guide. Ritholtz Wealth Management's Sean Russo told CNBC that the bar for the 1 December 2026 report is high. Company news from 6 November to 11 November 2026 covered awards, a venture investment in Daylight Security and a Qualys partnership. None of it changes the figures.
Bullish and bearish views on Okta, Inc.
The bull case on Okta, Inc. (OKTA), in brief: contracted backlog still outgrows revenue. The bear case: the index event is now behind.
Bull case
- Contracted backlog still outgrows revenue. For the quarter ended 31 July 2026, the 26 August 2026 Q2 FY27 release showed remaining performance obligations (RPO) of $4.858B, up 17% year over year. It showed cRPO of $2.585B, up 14%, and revenue of $805M, up 11%.
- Guidance went up at the last report. CNBC reported on 29 October 2026 that Okta raised its fiscal 2027 adjusted earnings-per-share guide to $3.90–$3.94, against $3.84 expected. The same report gave a free-cash-flow guide of $910–$930M.
- Newer products carry a growing share of bookings. Per CNBC on 29 October 2026, new products made up about 30% of Q2 bookings, led by Identity Governance. One Fortune 50 healthcare customer went from 50 to 1,500 AI agents in a few weeks.
- The price sits under most analyst targets. Jefferies raised its target to $240 on 24 September 2026, per 24/7 Wall St. Benzinga reported BMO's target at $245 (9 October 2026) and Citigroup's at $215 (15 October 2026). WallStreetBuys listed a $214.72 average target on 1 November 2026.
- Partner integrations keep adding up. Qualys added Okta to its Managed Risk Operations Center program on 9 November 2026. Okta announced support for NVIDIA's OpenShell reference architecture on 21 October 2026 and the Blueprint Alliance with AWS, CrowdStrike, Google Cloud and Zscaler on 22 September 2026.
Bear case
- The index event is now behind. S&P Dow Jones Indices set the addition for before the open on 4 November 2026. Finviz reported on 2 November 2026 that index funds were expected to buy. That scheduled demand has passed, and the shares closed below the 4 November 2026 close in each of the next five sessions.
- Okta fell with software's biggest winners. 24/7 Wall St. reported Okta down 10.41% on 5 November 2026, along with a 9% fall for CrowdStrike and a 10% fall for Palantir. Okta's 98% year-to-date gain was the largest of the three.
- Okta's own guide slows contracted growth. The 26 August 2026 guide puts Q3 FY27 cRPO growth at 11–12%, down from 14% in Q2. It puts revenue at $813–817M and adjusted earnings per share at $0.92–$0.94.
- Agent revenue remains too small to measure. CNBC and 24/7 Wall St. both reported Chief Executive Todd McKinnon saying on the 26 August 2026 call that Okta for AI Agents is too small to show up in the numbers yet.
- Insiders sold at higher prices. SEC Form 4 filings show the Chief Accounting Officer selling 14,677 shares at an average of $217.80 on 7 October 2026 and 8 October 2026. They show the CEO selling 48,822 shares at an average of $193.48 on 22 September 2026. Both sales ran under Rule 10b5-1 plans.
Price setup
The last close was $182.25 on 11 November 2026, up from $168.69 on 6 November 2026, the lowest close since the index announcement. It sits under the 50-day moving average of $197.46 and well above the 200-day moving average of $128.10, both as of 11 November 2026.
The shares closed 22.4% below the $235.00 intraday 52-week high of 12 October 2026. They are up 17.6% over three months from the $154.95 close of 13 August 2026. The 52-week closing low was $62.93 on 10 April 2026, so the year's gain is still large despite the November fall.
A recovery that holds under the 50-day average through 1 December 2026 fits the lag call. A close back above that average before the report would show buyers absorbing the post-addition selling.
Catalysts ahead
- 1 December 2026: Okta Q3 fiscal 2027 results, covering the quarter ended 31 October 2026. The first company figures since the index addition and the November software selloff. The report tests cRPO growth against the 11–12% guide and shows whether Okta discloses any figure for AI-agent products.
What would change the view
A daily close above $226.07, the 27 October 2026 close, which would show the shares leading the S&P 500 and prove this call wrong. A Q3 FY27 cRPO growth figure above the 12% top of the guide, together with a raised FY27 revenue outlook, would also prove it wrong.
What it trades with
Okta has moved with large security and software names on sector and macro headlines. CNBC reported on 29 October 2026 that Palo Alto Networks, CrowdStrike and Zscaler each fell about 6% after Fortinet's late-October report, and Okta fell with them. On 5 November 2026 it dropped alongside CrowdStrike and Palantir. A handful of sessions is too few to measure a stable sensitivity.
Okta is now a member of the S&P 500 it is measured against, which ties part of its trading to index flows. Retail attention stays high. Benzinga recorded CNBC segments featuring Okta on 29 October 2026 and 10 November 2026, the second alongside Palantir and Hewlett Packard Enterprise.
The evidence, claim by claim (8)
- Q2 FY27 revenue was $805M (+11% YoY); RPO was $4.858B (+17%) and cRPO $2.585B (+14%). Okta Q2 FY27 results release · as of
- Okta guided Q3 FY27 revenue to $813–817M, adjusted EPS to $0.92–$0.94 and cRPO growth to 11–12% YoY, and FY27 revenue to $3.216–3.226B. Okta Q2 FY27 results release; CNBC, 29 October 2026 · as of
- CNBC put Okta at about 57 times the midpoint of its FY27 adjusted EPS guide at a $222 share price, after a rise from $163 since the August report. CNBC, 29 October 2026 · as of
- S&P Dow Jones Indices announced Okta would join the S&P 500 before the open on 4 November 2026, replacing Kenvue. S&P Dow Jones Indices press release, 30 October 2026 · as of
- Okta fell 10.41% on 5 November 2026, closing at $171.16, as software's 2026 AI winners sold off after the 3 November 2026 midterms. 24/7 Wall St., 5 November 2026; adjusted daily closes · as of
- Chief Accounting Officer Shibu Ninan sold 14,677 shares at an average $217.80 on 7 October to 8 October 2026 under a Rule 10b5-1 plan. SEC Form 4 filed 9 October 2026 · as of
- Qualys added Okta as a strategic technology alliance partner in its Managed Risk Operations Center program. Company news, 9 November 2026 · as of
- WallStreetBuys listed a $214.72 average analyst price target for Okta; Finviz counted 34 Buy and 10 Hold ratings with no Sell. WallStreetBuys, 1 November 2026; Finviz, 2 November 2026 · as of
Sources
- Okta stock pullback: Josh Brown watches $190 support · cnbc.com ·
- Palantir Tumbles 10%, CrowdStrike Sinks 9% as Wall Street Dumps Software's AI Winners; Okta Drops 10% · 247wallst.com ·
- Okta Set to Join S&P 500; Others to Join S&P MidCap 400 and S&P SmallCap 600 · press.spglobal.com ·
- Half a Dozen Analysts Have a Buy Signal on Okta · 247wallst.com ·
- Finviz ·
- wallstreetbuys.com
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