With Thoma Bravo overture, COUP explodes 27%

• Bloomberg reports that Thoma Bravo is in late-stage talks to acquire Coupa Software.
• Rumors say the buyout offer may come at $81 a share.
• COUP stock jumped nearly 27% in Monday premarket to $78.70.
• Coupa Software announces earnings after the close on Monday.

Coupa Software (COUP) is getting yet another lift in its share price three weeks after Vista Equity Partners, a prominent tech-focused private equity company, helped the stock rally on news of an acquisition. Early Monday Bloomberg is reporting that Vista has been outbid by Thomas Bravo, another private equity firm. CNBC's David Faber then helped the COUP stock price soar even higher by reporting sources hearing rumors of $81 per share. Coupa Software stock is up 26.8% in Monday's premarket at $78.70.

Coupa Software stock news: COUP going private

$81 a share would value Coupa at about $6 billion, and Bloomberg is now reporting that Coupa has agreed to the deal at that price. This is a long distance from when it was valued near $26 billion during the height of the pandemic's market rally, but COUP shares are still down 62% year to date. It seems David Faber's tweet was right on point.

The deal values Coupa Software stock at $6.2 billion but gives it an $8 billion enterprise value due to its debt load. The price tag would be 77% above Coupa's market cap directly before Vista Equity Partners was said to be in acquisition talks in late November. There was no price tag attached to that earlier deal however. The current deal with Thoma Bravo features a large minority stake from the Abu Dhabi Investment Authority. Coupa Software provides corporations with a platform to monitor business-spend management.

The $81 acquisition offer is quite a bit lower than what top sharesholders had been expecting. One of them, HMI Capital Management, said in early December said Coupa was worth at least $95 a share. HMI owns about 5% of the company. Coupa has been on everyone's radar for months as many analysts named it a likely takeover target. RBC Capital Markets placed it in its list of the most likely software companies to be sold. Morgan Stanley had guessed $100 a share, while Raymond James had estimated $80 a share.

Coupa stock earnings preview

Wall Street is expecting Coupa Software to report Q3 earnings after the close on Monday. Analyst consensus puts adjusted earnings per share (EPS) consensus at $0.10 but GAAP EPS at $-1.14. Quite the difference! I can see why CEO Rob Bernshteyn wants to sell. In the year ago quarter, Coupa reported adjusted EPS of $0.28.

Analysts also put the over/under for revenue at $213.3 milllion. This equates to just a 14.8% growth rate since the same quarter last year. Coupa's revenue growth has been falling drastically since 2021, when it routinely grew revenue above 40% YoY. Last quarter it grew just 17.8% as part of a steady decline.

Coupa Software is one of these software stock that constantly reports and adjusted profit alongside a largescale GAAP loss, so the market mostly treats it as a money-losing entity. As interest rates have risen over the past year, profitless companies have seen their valutions diminish by leaps and bounds.

Unfortunately for bulls, a major beat on earnings should not affect the share price all that much. With $81 already the expectation, COUP stock does not have that much room to move higher, and a discount price usually exists between the takeover price and the market price in case the deal fails to go through.