Layoffs have been hitting the tech sector hard for the last several weeks, and now, one more firm has joined in stacking up pink slips in an ever-growing pile. The latest casualty is cybersecurity stock Okta (NASDAQ:OKTA), which announced plans to lay off 400 employees, and at an unusual time, too. Investors, meanwhile, took the move well and sent shares up over 2% in Thursday afternoon’s trading.
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The 400 about to be shown the door represents roughly 7% of Okta’s current workforce, and the move—according to word from CEO Todd McKinnon—was simply a matter of cost savings. Okta itself, meanwhile, is optimistic following the move, with it coming out to confirm its fourth-quarter and full-year guidance. It’s a pattern that’s running throughout the tech industry. In fact, January has seen about 24,000 workers lose their jobs as companies cut costs and attempt to retrench in the face of growing economic uncertainty.
An Old Familiar Theme
Interestingly, this is a familiar theme for Okta, who—almost exactly one year ago today—cut 300 employees, right around 5% of its total global workforce. Now, we see Okta come back, note that costs are still too high, and cut more workers. It’s hard to believe that Okta is apparently bleeding cash, considering that its revenue was up 21% to $584 million in the last report issued back in November. Yet somehow, this move is designed to “ensure profitable growth,” despite the fact that Okta is clearly growing. Will there be an unpleasant surprise with the fourth quarter numbers? Only time will tell.
What Is the Target Price for Okta?
Turning to Wall Street, analysts have a Hold consensus rating on OKTA stock based on seven Buys, 21 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 3.81% rally in its share price over the past year, the average OKTA price target of $83.75 per share implies 1% downside risk.
