Coupa Software (NASDAQ: COUP) is a hot stock in the enterprise software sector, overtaking the automated enterprise procurement market.
Coupa already has 2000 customers, with big clients such as Walmart and Amazon, since the company was founded, their platform already has processed an impressive $2.8 trillion in transactions.
As most big tech companies these days, Coupa is heavy into artificial intelligence. Every transaction that goes through Coupa’s platform is generating data points, as we know, data is one of the most critical and valuable assets in the field of AI.
Something that we really like about Coupa’s business model is the fact that its platform integrates itself into the customers operations, finance and supply chain. Why do we like that? Well, this means, that if a company decides to quit/leave, it’ll likely be a difficult, time-consuming, and expensive process because Coupa’s software is so deeply engrained in all major operations processes of the company. This makes Coupa a ‘sticky’ product which is strongly positive from a customer retention standpoint. Companies will definitely have to think twice before cancelling Coupa’s services and/or switch to another provider.
Industry analysts have also named Coupa’s procurement platform a leader and benchmark in the industry which communicates a lot about the quality of the service and product.
In terms of unrealized market potential, Coupa estimates their global customer potential to more than 100,000, equaling a whooping €94 billion in addressable market opportunity!
Considering Coupa’s already strong position, combined with the unrealized market potential, makes us think Coupa is only warming up and could become a real market-cap giant in the next decade or two if the company plays its cards right.
Since its all-time-high in February, the stock price of Coupa is down -35% at the time of this writing. The stock did recently find strong support in the range of $200-$220 which lead to a bullish impulsive move, indicating solid bullish interest at this support zone.
On weak pullbacks, we do think $200-$220 is a solid first support zone for investors to watch out for. A failure of this support however would open up a substantial amount of downside in the stock with $100-$125 being the next strong support in line.
Looking at the option positioning, there are about 51K calls and 58K puts, so a tad put heavy. There are no short dated expiries to cause short term pressure on the stock.
Option gamma positioning is suggesting there is potential support between $200 and $210, matching our first technical support zone.
FULL DISCLOSURE: Chris Capre currently has no stock or option position in COUP. If you’d like to learn more about Chris’s trades and positions, you can get access via the Trading Masterclass where he shares his live trades, further investment ideas and daily market analysis.