This is already in the app
Good point well made
Is the main competitor 1password?
I read recently that two couples launched 1password that offers 1 password to rule them all . And 14 years later, they just raised their 1st venture capital round: a shocking $200M:
I used google to find out and this is what I got:
Though it may be biased, since it’s from https://www.onelogin.com/pages/onelogin-vs
I always find it interesting to learn about why other people choose to invest in companies, so I thought I would share my justification to buy into Okta.
My overall strategy
I invest in tech and consumer companies because these are sectors that I understand well enough to be confident in my decisions. I generally look for companies that are likely to grow and my approach is to buy and hold. I have a relatively high appetite for risk.
Triggers to investigate Okta
- We have used them at work for single sign-on for about a year now. This is how I first heard about them.
- I noticed that the stock performance has been excellent: +100% in the last year, +350% in the last three years.
- Price is $129 - my portfolio is modest so if I buy a $1,000+ share it will make it very unbalanced. When fractional shares are introduced on Freetrade, this will not be a problem. For now, this price will allow me to buy a small initial holding.
Reasons to buy
- Strong previous performance as noted above (I know this isn’t an indictor of future performance, but it’s a better sign than a long-term decline).
- Strong history of revenue growth and forecast to continue.
- I know the problem they are trying to solve is endemic. I do consulting work with large corporations and they all have a large and growing number of SaaS products in their organisation, all of which have different logins.
- Their product is good for users of business applications (because they don’t have to remember many different usernames and passwords) and good for corporate IT (more secure, more control).
- They will be perceived as a neutral vendor by organisations because they are just doing identity. Microsoft - a competitor with Active Directory - also has Office, etc. so if you use them to manage single sign-on then you are just tying yourself into their ecosystem more.
- On Stratechery, there are a few articles covering their strategy which back this up, including an interview with the CEO:
We provide the identity cloud and it’s our platform. And it’s the first and only independent and neutral cloud platform for identity and you know that’s a lot of words in there. I think the most important word there is independent. And by independent, what I mean is, in previous generations of technology, identity was always sewn in in part of another platform. Whether you see Active Directory for Windows networks or Oracle Identity really being part of the Oracle Application Platform. Or even you can even think of the Apple identity is part of the Apple ecosystem. So, we’re the first one to kind of make identity its own platform.
- They are a leader in this field, as @engineer noted above.
Reasons to avoid
- They are losing money. However, as their S-1 filing explains, the contributing margin of any customer changes dramatically over time. As they are growing, you would expect them to be losing money before these customers start paying for themselves:
- Fairly close to their record high price, so risk that it could only go down from here.
Simply Wall St assessment is that it is overpriced:
Next steps for me
- Buy one or two shares initially.
- Their next earnings are released on Dec 5th, so I will wait until then in case there are any nasty surprises.
Earnings just came out and shares are down over 4% after hours:
Surprised by this. Especially since earnings beat market. I sold out at 5% profit in November after buying in August. Maybe time to buy back again.
I bought at 132$ and still waiting.
They just beat earnings, and their shares are slightly up despite it being a red day for the markets.
@Phil How difficult would it be to move away from Okta? How sticky is the product?
Q1 earnings expected this week! I wouldn’t be surprised if we see a small sell off, but I’ll be holding this stock for a while.
I made a post about the same today
It’s been one of my best performers over this Covid crisis. Currently up at all time highs. Whether it sells off or not depends on how earnings compare to the estimates. If we get a beat they might go up
Management said it expected revenue to grow 37% to 38% year over year during fiscal Q1. The current situation could provide a headwind to growth. But I don’t know of course. Capital at risk.