3 Reasons ONTF is Risky and 1 Stock to Buy Instead

While the S&P 500 is up 16.2% since March 2025, ON24 (currently trading at $5.94 per share) has lagged behind, posting a return of 5.9%. This might have investors contemplating their next move.

Is there a buying opportunity in ON24, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Do We Think ON24 Will Underperform?

We're sitting this one out for now. Here are three reasons we avoid ONTF and a stock we'd rather own.

1. Declining Billings Reflect Product and Sales Weakness

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

ON24’s billings came in at $25.93 million in Q2, and it averaged 3.3% year-on-year declines over the last four quarters. This performance was underwhelming and shows the company faced challenges in acquiring and retaining customers. It also suggests there may be increasing competition or market saturation.

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect ON24’s revenue to drop by 4.6%. While this projection is better than its two-year trend, it’s tough to feel optimistic about a company facing demand difficulties.

3. Operating Losses Sound the Alarms

While many software businesses point investors to their adjusted profits, which exclude stock-based compensation (SBC), we prefer GAAP operating margin because SBC is a legitimate expense used to attract and retain talent. This metric shows how much revenue remains after accounting for all core expenses – everything from the cost of goods sold to sales and R&D.

ON24’s expensive cost structure has contributed to an average operating margin of negative 31.3% over the last year. Unprofitable software companies require extra attention because they spend heaps of money to capture market share. As seen in its historically underwhelming revenue performance, this strategy hasn’t worked so far, and it’s unclear what would happen if ON24 reeled back its investments. Wall Street seems to think it will face some obstacles, and we tend to agree.

Final Judgment

We see the value of companies addressing major business pain points, but in the case of ON24, we’re out. With its shares lagging the market recently, the stock trades at 1.8× forward price-to-sales (or $5.94 per share). This multiple tells us a lot of good news is priced in - you can find more timely opportunities elsewhere. We’d suggest looking at the Amazon and PayPal of Latin America.

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