OKTA (OKTA) Surged as its Financial Performance Exceeded Market Expectations

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here.  Uncertainty surrounding prospective tariff policies weighed on investor sentiment and risk assets in the quarter, leading U.S. equities to experience their weakest performance since 2022.  Value stocks outperformed their growth counterparts within the small-cap space. Against this backdrop, the fund returned -8.01% (net) compared to the Russell 2500 Growth Index’s -10.80% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Meridian Growth Fund highlighted stocks such as Okta, Inc. (NASDAQ:OKTA). Okta, Inc. (NASDAQ:OKTA) is an identity partner that offers products and services to manage and secure identities. The one-month return of Okta, Inc. (NASDAQ:OKTA) was -12.24%, and its shares gained 17.03% of their value over the last 52 weeks. On June 3, 2025, Okta, Inc. (NASDAQ:OKTA) stock closed at $103.58 per share with a market capitalization of $18.134 billion.

Meridian Growth Fund stated the following regarding Okta, Inc. (NASDAQ:OKTA) in its Q1 2025 investor letter:

“Okta, Inc. (NASDAQ:OKTA) is the largest independent identity software company, serving a broad array of clients including enterprises, universities, and government agencies. Its competitive advantage lies in its advanced security authentication solutions and integration with over 7,000 software vendors. The company beat market expectations across all metrics and raised its growth outlook through 2026. While we were encouraged by the performance and market reaction, we elected to reduce our position due to potential execution risks tied to a recent sales force reorganization. Despite this caution, we continue to view Okta’s long-term growth opportunity as compelling and maintain a smaller position.”

Why Okta, Inc. (OKTA) Crashed Last Week

A mobile application developer programming on a tablet, illustrating the power of the company’s adaptive multi-factor authentication.

Okta, Inc. (NASDAQ:OKTA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 65 hedge fund portfolios held Okta, Inc. (NASDAQ:OKTA) at the end of the first quarter, which was 72 in the previous quarter. While we acknowledge the potential of Okta, Inc. (NASDAQ:OKTA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Okta, Inc. (NASDAQ:OKTA) and shared Sands Capital Technology Innovators Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.