Okta, Inc. (NASDAQ: OKTA), the identity and access management specialist, just delivered another quarter of double‑digit growth and fat margins – and the market’s response was to push the stock to a new 52‑week low. Welcome to modern equities, where “good” often isn’t good enough.
As of December 3, 2025, investors are trying to reconcile three big forces around Okta stock:
- strong Q3 FY2026 earnings and cash flow,
- lingering trust issues after repeated security incidents, and
- a suddenly more cautious tone on long‑term guidance from management.
Here’s a deep dive into what’s going on with OKTA today, how Wall Street is reacting, and what the current forecasts say.
Key takeaways for Okta (OKTA) on December 3, 2025
- Q3 FY2026 beat: Revenue rose 12% year‑over‑year to $742 million, with non‑GAAP EPS of $0.82, both topping expectations. Free cash flow hit $211 million (28% of revenue). [1]
- Guidance twist: Q4 guidance is solid, but Okta declined to offer preliminary fiscal 2027 guidance, a break from its usual practice – a key trigger for the sell‑off. [2]
- Stock under pressure: OKTA recently touched a new 52‑week low around $75.29 before rebounding into the low 80s. [3]
- Analysts still broadly bullish: Across major aggregators, Okta holds a “Buy” / “Moderate Buy” consensus with average 12‑month price targets clustered around $115–$120, implying roughly 40–50% upside from current levels. [4]
- Risk overhang: Recent disclosures about a multi‑day breach affecting 366 customers (≈2.5% of Okta’s base), combined with earlier support‑system breaches, continue to weigh on the trust narrative. [5]
Okta stock today: earnings strength vs. price weakness
On December 3, 2025, Okta’s share price story is almost the mirror image of its income statement.
- An Investing.com update notes that Okta shares hit a 52‑week low at $75.29, before rebounding to around the low‑80s. Over the last 12 months, the stock is still slightly negative, down roughly 5%, even as broader indices gained ground. [6]
- Market commentary from TIKR and other outlets highlights that the stock is down around 3–4% in post‑earnings and pre‑market trading, despite Okta beating expectations. [7]
So the headline setup is strange but clear: fundamentals improved, but sentiment deteriorated.
Institutional flows underline that split personality:
- A recent MarketBeat report shows Schroder Investment Management Group boosted its Okta stake by about 65.9% in Q2, while noting that analysts overall rate the stock a “Moderate Buy” with an average target near $115.94. [8]
- At the same time, Sands Capital’s Technology Innovators Fund disclosed that it exited its Okta position in Q3 2025, signalling that not every growth manager is willing to ride out the volatility. [9]
In short, the market is divided: some big investors are doubling down at lower prices, while others are walking away.
Q3 FY2026 results: strong growth, fatter margins, higher cash
Okta’s official Q3 FY2026 release (for the quarter ended October 31, 2025) paints a picture of a company that has moved far past its “cash‑burning SaaS” era. [10]
Key numbers from the quarter:
- Revenue: $742 million, up 12% year‑over‑year
- Subscription revenue: $724 million, up 11%
- RPO (remaining performance obligations): $4.292 billion, up 17%
- Current RPO (next 12 months): $2.328 billion, up 13% [11]
- Non‑GAAP operating income: $178 million (24% margin), up from 21% a year ago
- Non‑GAAP EPS: $0.82 vs. $0.67 in the prior‑year quarter
- Free cash flow: $211 million (28% margin), up from 23% last year [12]
From a “spreadsheet view,” this is exactly what investors say they want out of mature SaaS:
slowing but still‑double‑digit growth, expanding margins, and strong free cash flow.
Okta also raised its full‑year FY2026 outlook, guiding:
- FY2026 revenue: $2.906–$2.908 billion (≈11% growth)
- Full‑year non‑GAAP operating margin: ~26%
- Full‑year FCF margin: ~29% [13]
On top of that, Q4 guidance calls for:
- Revenue: $748–$750 million (≈10% growth)
- Non‑GAAP EPS: $0.84–$0.85
- Non‑GAAP operating margin: ~25%
- Free cash flow margin: ~31% [14]
Analysts generally agree that the company beat on revenue, beat on EPS, and raised guidance modestly – a classic “clean” quarter on the numbers. [15]
So why the slump?
Why investors sold Okta stock after the beat
Most commentary on December 3 circles back to one decision: Okta chose not to provide preliminary fiscal 2027 guidance.
CoinCentral’s post‑earnings analysis, along with other coverage, confirms that: [16]
- Okta beat Q3 estimates with EPS of $0.82 vs. about $0.75–$0.76 expected and revenue of $742 million vs. ≈$730 million forecast.
- Shares still fell more than 3% after hours.
- The main reason cited: management broke with past practice by skipping early fiscal 2027 guidance, which investors had come to rely on for long‑term modelling.
CFO Brett Tighe framed this as a seasonality and prudence issue, suggesting the company didn’t want to provide a multi‑year outlook during a choppy macro environment. [17]
From the market’s perspective, that move is easy to interpret as:
“You’re not ready to stand behind a growth re‑acceleration story yet.”
That concern is sharpened by the fact that:
- Current RPO growth at 13% is slower than total RPO at 17%, hinting at some deceleration in near‑term contracted growth. [18]
- Okta’s growth has already cooled from the high‑20s / low‑30s percent levels it enjoyed a few years ago to low‑teens today.
So the working theory on the sell‑off is simple:
the quarter’s numbers were solid, but the narrative investors wanted – a clear path to re‑accelerating growth – didn’t fully materialize.
Breaches and trust: the security story behind the security stock
You know life is complicated when a security company becomes a recurring character in breach headlines.
Recent reporting from privacy and security outlets outlines a multi‑year pattern: [19]
- In 2023, Okta disclosed that attackers gained access to its customer support system, using stolen credentials to access troubleshooting files (HAR files) that sometimes contained session tokens for customers.
- Subsequent analysis showed that some customers had to rotate credentials and tokens, even though most downstream attacks were reportedly contained. [20]
- In October 2025, Okta acknowledged that a separate incident tied back to a 2022 compromise had actually affected 366 companies — about 2.5% of its customers — over a roughly five‑day window. [21]
- Security trade press has described these cumulative events as a “massive” breach of trust that will take time to fully repair in the eyes of CISOs. [22]
To be clear: there’s no sign Okta is uniquely incompetent; large identity vendors are structurally high‑value targets.
But for investors, the optics matter:
- Any future incident could hit the stock harder than for a company without this history.
- Some CIOs and CISOs may hesitate to consolidate more workloads onto Okta, even if the platform is technically strong.
That breach overhang is one of the big “non‑spreadsheet” risks sitting next to the otherwise attractive margin profile.
AI, Auth0, and the long‑term identity security thesis
Against that backdrop, Okta’s management is trying to steer the story toward AI‑driven identity security.
From the Q3 press release and CEO Todd McKinnon’s recent comments: [23]
- Okta is positioning itself as a “neutral identity fabric” that can sit across many different AI models and cloud environments.
- The company recently launched “Auth0 for AI Agents”, aiming to secure non‑human identities like bots and AI agents calling internal APIs.
- Newer products such as Okta Identity Governance and identity‑threat / posture tools are gaining adoption, especially among large enterprises.
- McKinnon has argued in interviews that investors are underestimating how AI will increase, not decrease, demand for software and identity infrastructure – because every AI agent that can touch sensitive systems needs identity, authorization, and governance wrapped around it. [24]
The working thesis here:
- If AI agents really become ubiquitous in corporate workflows, the number of identities to secure explodes (humans + apps + services + agents).
- Okta’s installed base and neutral positioning could make it a key control plane for that world, expanding its total addressable market beyond classic workforce and customer identity.
That AI‑adjacent narrative is a big part of why some analysts still see outsized upside from current prices, even after the stock’s drawdown.
What Wall Street is saying: ratings, targets, and fresh revisions
Analyst coverage on December 3, 2025 is busy, slightly bruised, but still mostly optimistic.
Consensus view: upside from the low‑80s
- StockAnalysis.com reports that around 37 analysts cover Okta, with a consensus “Buy” rating and an average price target near $118, with estimates spanning roughly $75 to $140. [25]
- MarketBeat and related coverage note that the Street currently sits at a “Moderate Buy”, with 23 Buy, 13 Hold, and 3 Sell ratings, and an average target around $115.94 – about 40% upside vs the recent low‑80s share price. [26]
- TipRanks shows a similar pattern: a high target around $145, a low around $75, and an average target implying about 45–46% upside from current levels around $80. [27]
So even after multiple target cuts, the median analyst still thinks OKTA is materially undervalued at today’s price.
Fresh target cuts: caution on growth and multiples
Several firms used the Q3 print to reset expectations:
- BMO Capital cut its target to $90 (from roughly $112), keeping a Market Perform stance. BMO highlighted sector‑wide multiple compression and concerns around the pace of growth in backlog, even while acknowledging Okta beat on every key line item. [28]
- J.P. Morgan lowered its target from $140 to $115 but maintained an Overweight rating, citing a still‑attractive risk/reward but a need for more clarity on post‑2026 growth. [29]
- Jefferies reduced its target from $105 to $90 with a Hold rating, while Barclays moved to around $95 with an Equal‑Weight view. [30]
- Scotiabank adjusted its target to $85, also reflecting more conservative growth assumptions. [31]
Taken together, this camp is effectively saying:
“Good company, improving margins, but we’re not paying 2021‑era multiples for low‑teens growth.”
The bulls: still seeing big upside
The optimists haven’t gone quiet, though:
- DA Davidson reiterated a Buy rating with a $140 price target, framing that as about 70% upside from a share price just above $82 and arguing that Okta screens undervalued on several fair‑value metrics. [32]
- Canaccord Genuity reaffirmed a Buy and $120 target on December 3, 2025, signalling confidence in the company’s strategy and execution despite the near‑term volatility. [33]
- Other positive notes from Bernstein, Oppenheimer, Truist and others stick to Outperform/Buy ratings with targets ranging from the mid‑110s to the high‑120s, emphasizing resilient earnings, strong large‑customer momentum, and the long‑term identity and AI story. [34]
In aggregate, analysts appear to agree on three things:
- Okta is no longer a hyper‑growth story.
- It is a high‑margin, cash‑generative platform with a credible AI‑driven runway.
- The stock is cheap if management can stabilize and then gently re‑accelerate growth.
Institutional positioning: who’s buying the dip?
Beyond retail sentiment and analyst notes, the positioning of large funds adds a bit of color:
- MarketBeat reports that Schroder Investment Management Group increased its stake in Okta by roughly 65.9% during Q2, a sizable vote of confidence from a long‑only active manager. [35]
- On the other hand, the Sands Capital Technology Innovators Fund disclosed that it fully exited its Okta position in Q3 2025, reallocating capital to other growth names. [36]
We don’t have perfect visibility into every manager’s thesis, but the split is revealing:
- Some funds see “compounder at a discount”, leaning into compressed multiples.
- Others see better risk‑adjusted opportunities elsewhere in software and cybersecurity.
What to watch next: catalysts and risks for OKTA in 2026
From here, the Okta story is going to pivot on execution rather than promises. A few key variables investors are likely to track:
1. Growth trajectory
- Can revenue growth hold low‑teens or tick back toward mid‑teens as new products ramp?
- Does current RPO growth remain in the low‑teens, or does it drift lower, signalling further deceleration? [37]
2. AI and new‑product adoption
- Uptake of Auth0 for AI Agents, Identity Governance, and threat‑detection modules will indicate whether Okta can expand wallet share in existing customers rather than just win new logos. [38]
3. Security and trust
- Any additional breach headlines would almost certainly trigger outsized stock reactions given Okta’s history.
- Conversely, a stretch of quiet, uneventful security quarters, plus credible third‑party validations and customer wins, could gradually rebuild the narrative that Okta is a safer than average identity partner again. [39]
4. Long‑term guidance comeback
- At some point, management will need to start talking explicitly about post‑FY2026 growth again.
- When fiscal 2027 guidance eventually arrives, the growth range and margin assumptions will likely be a major catalyst in either direction.
Bottom line: a classic “show‑me” stock at a compressed valuation
As of December 3, 2025, Okta is caught between two narratives:
- The bear case says: growth is slowing, competition in identity and security is intense, repeated breaches have weakened trust, and management’s reluctance to guide out to 2027 suggests limited visibility.
- The bull case says: Okta has a defensible place at the center of identity, is compounding free cash flow at close to 30% margins, and is strategically positioned for the next decade of AI‑driven identity demand – while trading well below prior multiples and well below the Street’s average target. [40]
Both stories can be true at the same time. The difference, as always in markets, comes down to how much execution risk you think is priced in.
References
1. www.okta.com, 2. www.okta.com, 3. www.investing.com, 4. www.marketbeat.com, 5. onerep.com, 6. www.investing.com, 7. www.tikr.com, 8. www.marketbeat.com, 9. finance.yahoo.com, 10. www.okta.com, 11. www.okta.com, 12. www.okta.com, 13. www.okta.com, 14. www.okta.com, 15. coincentral.com, 16. coincentral.com, 17. coincentral.com, 18. www.okta.com, 19. onerep.com, 20. thehackernews.com, 21. onerep.com, 22. www.informationweek.com, 23. www.okta.com, 24. www.marketwatch.com, 25. stockanalysis.com, 26. www.marketbeat.com, 27. www.tipranks.com, 28. coincentral.com, 29. www.gurufocus.com, 30. www.gurufocus.com, 31. www.gurufocus.com, 32. in.investing.com, 33. www.gurufocus.com, 34. www.investing.com, 35. www.marketbeat.com, 36. finance.yahoo.com, 37. www.okta.com, 38. www.okta.com, 39. onerep.com, 40. www.okta.com
