What happened
Shares of Coupa Software (COUP) gained 26.5% in March 2021, according to data from S&P Global Market Intelligence. The maker of software and cloud-based tools for business spend management reported solid fourth-quarter results on March 16, but the bottom-line surprise wasn't enough to keep the soaring stock afloat.
So what
Coupa's fourth-quarter sales rose 47% year over year to $164 million. Adjusted earnings fell from $0.21 to $0.17 per share. Both figures left Wall Street's consensus estimates far behind at $146 million and a loss of $0.11 per share, respectively. Management's bottom-line guidance for the next quarter and the 2021 fiscal year came in below expectations, though. Investors shrugged off the strong revenue guidance to focus on the disappointing profit projections. Coupa's shares fell as much as 10% the next day as various analyst firms saw very different market values in the same financial tea leaves.
Image source: Getty Images.
Now what
In a broader sense, Coupa was caught up in a marketwide retreat from skyrocketing growth stocks. The coronavirus vaccine rollout has inspired many investors to take growth-stock profits off the table and reinvest them in calmer, safer businesses. Even now, Coupa's stock has gained a market-crushing 80% since early 2020. Shares are trading at a steep 33 times sales and Coupa is not profitable yet. This volatile stock is a bit of an acquired taste and it's not a great fit for value-oriented portfolios.
