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When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. One great example is Okta, Inc. (NASDAQ:OKTA) which saw its share price drive 286% higher over five years. On top of that, the share price is up 14% in about a quarter. But this could be related to the strong market, which is up 8.1% in the last three months.
Although Okta has shed US$1.3b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
See our latest analysis for Okta
Given that Okta didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
For the last half decade, Okta can boast revenue growth at a rate of 37% per year. Even measured against other revenue-focussed companies, that's a good result. So it's not entirely surprising that the share price reflected this performance by increasing at a rate of 31% per year, in that time. This suggests the market has well and truly recognized the progress the business has made. To our minds that makes Okta worth investigating - it may have its best days ahead.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Okta is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Okta in this interactive graph of future profit estimates.
A Different Perspective
We regret to report that Okta shareholders are down 58% for the year. Unfortunately, that's worse than the broader market decline of 9.3%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 31% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Okta , and understanding them should be part of your investment process.