Okta stock fell for a second straight day on Wednesday as customers and analysts mulled the cybersecurity firm's response to a hacking incident involving its systems.
OKTA stock tumbled 10.7% to close at 148.55 on the stock market today. Meanwhile, Okta stock slipped 1.7% on Tuesday.
On Monday, a hacking group called "Lapsus$" announced it gained access to Okta systems. The group posted online screenshots taken from a computer used by one of Okta's third-party customer support engineers, according to the cybersecurity firm.
And that prompted Raymond James analyst Adam Tindle to downgrade OKTA stock to market perform from strong buy.
"Okta's handling of this security incident is likely to cause customers to pause in consolidating additional functionality onto Okta's platform," Tindle said in a note to clients. "Our prior thesis was predicated on the notion that Okta could become a 'platform cloud,' similar to Salesforce.com."
OKTA Stock: Customer Reaction To Report
Okta's cybersecurity software monitors and manages privileged accounts. Hackers often target employees or management with administrative access to company computer systems.
Okta on Tuesday said it was investigating the issue. Management reported no breach of Okta services and remain fully operational with no corrective actions needed by customers.
But some Okta stock analysts say the company should have been more transparent about the "Lapsus$" issue after a security incident was first detected in January.
Okta Chief Security Officer David Bradbury, in an updated blog on Wednesday, provided more information. He said an outside company, Sitel, provides Okta with contract workers for customer support.
"I am greatly disappointed by the long period of time that transpired between our notification to Sitel and the issuance of the complete investigation report," Bradbury said. "Upon reflection, once we received the Sitel summary report we should have moved more swiftly to understand its implications."
Okta Reputation Impact?
At William Blair, analyst Jonathan Ho in a report said "Lapsus$" had earlier breached large organizations. They included Microsoft, Samsung, and Nvidia.
"We believe the company (Okta) will need to reassure its 15,000 customers that their systems are protected, and that Okta's internal security posture is sound," Ho said.
Further, Okta stock analyst Matthew Hedberg from RBC Capital Markets said in a report: "If this event ends up being more consequential than initial investigations show, there could be a reputational impact to Okta."
San Francisco-based Okta in May acquired Auth0.
If you're new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns for issues such as Okta stock is one key to the investment guidelines.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
Apple Set For 'Monster Growth Cycle' Over Next Year Plus
Why The Controversy Over 5G Home Broadband Isn't Going Away
Best Growth Stocks To Buy And Watch: See Updates To IBD Stock Lists
Chart Reading For Beginners: Nvidia, Amazon, Pinterest Reveal This Key Investing Skill
How To Use The 10-Week Moving Average For Buying And Selling
