Software company trades at a discount

Enterprise software companies have had a terrible year so far in 2022, big name companies such as Oracle, Workday, SAP, Salesforce and many others have seem major stock price drops.  Nasdaq stocks and particularly tech companies with weak earnings should see multiple contraction as prices have been lofty.

Shares of Coupa (COUP) have dropped from $283 to $50, and just bounced to $57. Too early to tell if the stock has bottomed or if we will see a lower leg in the future. What we do know is that this company is a growth juggernaut, revenue has tripled in the past 3 years, and they've beat consensus earnings for the past 4 quarters handily.

We like the management story at Coupa, the revenue growth, and in the short term the selling seems overdone. We are buying December 2022 $65 Calls on COUP for $8.50. This trade gives us plenty of time for the stock to recover, positive earnings should also be a tailwind.  There's a medium risk that the stock continues to slide lower without a bounce, but we see that as a low probability considering how far the stock has already fallen.