Why Okta Stock Jumped Today

What happened

Shares of Okta (NASDAQ:OKTA) rallied on Wednesday, jumping as high as 8.9%. As of 12:42 p.m. ET, the stock was still up 6.8%.

Major stock indexes were significantly higher, which no doubt provided tailwinds for the identity verification and cybersecurity specialist. While there was no company-specific news pushing Okta up, the catalyst was likely the news that a rival was being deprived at a high price.

So what

Ping Identity Holding (NYSE: PING) today revealed it was being acquired by tech-focused private equity firm Thoma Bravo. The acquisition will be an all-cash deal that values ​​Ping Identity at $2.8 billion. Assuming the deal is approved, shareholders will receive $28.50 per share, which is a hefty 63% premium to the stock’s closing price on Tuesday.

The deal will ultimately require shareholder and regulator approval, but barring unforeseen hurdles, the acquisition is expected to close later this year.

Now what

Okta is one of several high-growth tech stocks that have been hampered by the bear market, with stocks currently down around 62% from highs reached late last year. Aside from the drop in share price, Okta’s opportunity in its space remains vast.

The company generated $1.3 billion in revenue in fiscal 2022 (ended Jan. 21), but that’s a drop in the bucket compared to its total addressable market, which management estimates at 80. billions of dollars.

Additionally, digital transformation is underway as businesses continue to join the cloud revolution. Providing identity verification and access management solutions is more important than ever. Okta is the industry leader, according to Gartnerwhich ranked it at the top of its highly publicized Magic Quadrant. Forrester Research came to a similar conclusion, naming Okta the leading identity provider as a service for enterprises.

Ping Identity’s high buyout premium only serves to validate the value of Okta’s services and the breadth of its opportunities.

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Danny Vena holds positions at Okta. The Motley Fool holds positions and recommends Okta. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

James T. Quintero