Growth stocks tend to be volatile investments, and the market often overreacts to both their good and bad news. On the bright side, that occasionally creates buying opportunities for long-term investors. By thinking in terms of years rather than days, you can look past the near-term headwinds and focus on the big picture.

For instance, the share price of Coupa Software (COUP +0.00%) has fallen nearly 35% from its 52-week high, fueled in part by a broader rotation away from growth stocks. However, that doesn't mean the tech company has altogether lost its strong competitive position and big market opportunity. Here's how this exciting stock could grow tenfold in the next decade.

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A strong competitive position

Coupa specializes in business spend management (BSM). Its software platform connects clients (i.e. buyers) with over seven million suppliers, helping them control spend, optimize supply chains, and realize cost savings. In a general sense, Coupa is both an e-commerce marketplace and an expense management tool for businesses, designed to simplify traditional procurement and enterprise resource planning solutions.

Coupa's scale is one of its greatest assets. Over 2,000 businesses rely on its BSM platform, and Coupa enables these clients to pool their collective buying power through group sourcing events. This helps clients achieve better prices than they could get alone. Coupa also offers a range of pre-negotiated discounts across categories like office supplies and promotional products, creating instant value for clients.

Since its founding, Coupa's platform has powered $2.8 trillion in business spend, creating troves of transaction data in the process. To that end, Coupa leans on artificial intelligence to surface suggestions, including cost savings opportunities and supply chain risk management strategies. This capability sets Coupa apart from its rivals, as its platform is the only BSM suite that offers real-time prescriptive insights.

Broadly speaking, this creates a network effect. Each customer adds to the collective buying power of the Coupa community, and each transaction generates more data for its AI models. In both cases, this enhances the value proposition for every customer, driving greater costs savings through group sourcing events and more intelligent recommendations.

Given its strong competitive position, research company Gartner has recognized Coupa as the leading provider of procure-to-pay software for the last five consecutive years. In the most recent report, Gartner specifically cites the platform's deeply integrated payment capabilities, robust network of suppliers, and AI-powered prescriptive insights as key differentiators.

Not surprisingly, that value proposition has helped Coupa deliver strong growth over the last three years.

Data source: YCharts. TTM = trailing-12-months. CAGR = compound annual growth rate. Note: Q2 2022 ended July 31, 2021.

A big market opportunity

Looking ahead, management believes its BSM suite meets the needs of over 100,000 businesses, comprising a $94 billion addressable market.

To capitalize on that opportunity, Coupa has formed a vast partner ecosystem, including referral partners and systems integrators like Accenture and Deloitte. This strategy should help Coupa grow its business by on-boarding new clients, but it should also drive efficiency by enabling the company to offload support services.

Currently, Coupa teams help clients with implementation and configuration, but the revenue on these services comes with a negative gross margin. However, as firms like Accenture assume responsibility for these tasks, Coupa's gross profit should rise, allowing the company to allocate capital to other growth-generating endeavors.

To add, Coupa's partner ecosystem also includes technology companies like DocuSign and Workday. These third-party software vendors provide integrations through the recently launched Coupa App Marketplace. This extends the functionality of Coupa's platform by allowing clients to sync its BSM suite with tools for e-signatures, human capital management, and much more.

10x returns are not out of reach

Here's the bottom line: Coupa has established a strong competitive position. And given the magnitude of the market opportunity, there could be significant upside here for investors. Even if Coupa grows revenue at 30% annually through 2031, assuming no change in the P/S ratio, the market cap could would grow 13 times in value. This year, the stock got a little ahead of itself, but the recent pullback creates a buying opportunity. And if the company can maintain its financial momentum, I think this growth stock could jump tenfold in value over the next decade.