PreMarket Prep Stock Of The Day: Bottom Fishing With Coupa Software

Bottom fishing can be a dangerous sport but can be rewarding if executed correctly. Once again, an issue in the growth technology sector offered up an opportunity to "buy the dip" Tuesday. 

That issue is the cloud-based business spending management platform Coupa Software Inc COUP, which is the PreMarket Prep Stock of the Day.

Coupa's Fall From Grace: The issue made its all-time high in February 2021 at $377.05 and by the end of March it was over $100 lower at $254.48 — and the sell-off was just beginning. Coupa stock ended 2021 at $196.66 and has been lower every month this year. It has been hit the worst in March, so far falling from $121.01 to $72 or by 40%. 

Coupa Sellers Appear Ahead Of Earnings: Some investors were not anticipating good results from the company and/or bad guidance, as the issue swooned from the Wednesday, March 9 close ($116.59) to end Monday’s session at $89.82.

Coupa Reports Q4 Beat, Lower Guidance: After the close on Monday, the company reported quarterly earnings of 19 cents per share, which beat the analyst consensus estimate of 5 cents by 280% The company reported quarterly sales of $193.3 million, which beat the analyst consensus estimate of $185.68 million by 4.1%. This is an 18.19% increase over sales of $163.54 million in the same period last year.

However, the company lowered first-quarter FY2023 revenue guidance to a range of $189-$191 million vs. a $196.1-million estimate. Also, the company lowered total revenue guidance for FY2023 to a range of $836-$840 million vs. the $877.5-million estimate.

PreMarket Prep's Take: When the issue was being covered on the show Tuesday, it had already established its premarket low of $62.26 and was trading at the $65 area. Co-host Dennis Dick noted the issue was off the premarket lows and very oversold, but was not attempting to call a bottom.

The author of this article informed investors of an overshoot in the premarket and the likelihood the premarket low may not be revisited.

A patient buyer appeared at Coupa's current area ($65) in the premarket session who may or may not be willing to pay more during the regular session.

COUP Price Action: After a much lower open ($64.91 vs. $89.82), buyers swarmed the issue. In fact, the opening print was only 12 cents away from the low of the day at $64.79.

As of noon, the ensuing rally took the issue to $76.54 before the stock backed off to the $71 area.

It was trading down 21.19% Tuesday afternoon at $70.78. 

The discussion on the issue from Tuesday’s show can be found here: