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Investors are bailing on Okta (OKLO) stock ahead of the company’s fiscal Q2 results, scheduled for release after the market closes on August 26. Consensus is for the enterprise software firm to record $0.44 in earnings per share (EPS), which would represent 2.33% growth year-over-year.
Despite recent declines, OKTA shares remain up nearly 60% versus the start of this year.
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Options Pricing Suggests Further Downside in OKTA Stock
While OKTA stock has already pared back some of its year-to-date gains in August, a mere 2.33% year-on-year increase is not sufficient for the options traders to remain bullish.
According to Barchart, the put-to-call ratio on contracts expiring Aug. 28 sits at 1.09x currently, indicating a bearish skew. And the lower price on those options contracts is set at just over $116, signaling the earnings event could trigger a more than 11% decline in OKTA’s share price by the end of this week.
Crucially, this bearish sentiment is echoed in the company’s historical performance as well; OKTA has lost 6.82% on average in September since 2017.
OKTA Shares Are Not Inexpensive to Own in 2026
Investors are advised to exercise caution when buying the recent dip in OKTA stock, as it is trading at a premium multiple.
At a forward price-to-earnings (P/E) ratio of more than 76x, the firm’s equity is currently more expensive to own than the best-of-breed AI stocks, including Nvidia (NVDA) at about 25x.
Investors should also note that insiders have predominantly unloaded Okta in the trailing 12 months, which further indicates that those closest to the company likely see limited upside from the current price. And it’s not like OKTA pays a healthy dividend to incentivize ownership despite these red flags.
How Wall Street Recommends Playing Okta
On the flip side, however, Wall Street analysts do not currently share the options market pessimism and, in fact, view OKTA shares as undervalued heading into the Q2 print.
The consensus rating on Okta sits at “Strong Buy,” with price objectives as high as $180 signaling potential for a more than 35% rally from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
