Xro - xero

[couta1]

So 3 analysts say Xro is going to fall short on its growth numbers,hopefully not more pain at the pump,may get more stop losses triggered?

[nextbigthing]

Happy to place a friendly, small wager on this (considering I can't find any easy way to short this stock). Who's keen?

Nice bottle of red (preferably pinot noir) as the wager??

Hey guys, B E's back.....

[couta1]

What three analysts are those mate? I might have to dig up my old graph that based on simple trend showed that slower sales growth should be expected for the next couple periods or so, that is until the US numbers start to dominate whereby growth will then start to accelerate again.
Don't worry T these are 3 analysts from Reuters the same guys that have had Methven as outperform for the last year,yeah right pass me another Tui,of course some will be sucked in and sell out

[winner69]

Hey guys, B E's back.....

Hadn't you cottoned on before now

[couta1]

You got a link for that? I'd like to have a read, see how their numbers correlate with mine. Cheers.
No just read the news report that they were from Reuters

[nextbigthing]

Hadn't you cottoned on before now

Bit naive Winner.

[couta1]

OK. What news report though?
I got it from the daily share trader am update which links with NBR article titled Markets close down as Xros Growth falters

[tzbang]

That NBR article said that 3 analysts have changed their recommendations to sell after a slight shift away from tech stocks. They seemed to suggest that long term figures might be much larger but in the short term it might drop further. But it seems like every time an article comes up with something like this the opposite happens and xro climbs back up quicker than expected. Thoughts?

[tzbang]

That NBR article said that 3 analysts have changed their recommendations to sell after a slight shift away from tech stocks. They seemed to suggest that long term figures might be much larger but in the short term it might drop further. But it seems like every time an article comes up with something like this the opposite happens and xro climbs back up quicker than expected. Thoughts?

[tzbang]

How far do you see the short term drop Tumeric? I'm surprised the KPMG development hasn't rallied things much/at all.

[couta1]

If this drop off keeps up my stop loss will be triggered and I'll be out unfortunately,will still be a 15% loss and a tidy sum

[fiasco]

I'm sure gloating isn't a very humble form, show some form of compassion. Everybody has their own style of investing.

FYI Not a holder, but always watching Xero :)

[vorno]

Tell ya what's caught my attention:



Buyers
Buy Quantity
Prices




2
100,000
$36.500

[robbo24]

I'm sure some new member was ranting earlier in this thread about how overvalued this stock was. Oh yeah, that was me :cool:

I still maintain that anybody buying in at these levels deserves a shock. I mean honestly, do you really think this company is worth $5 billion? LOL. :)

NewGuy, member since last month. How long have you been watching XRO? Have you never seen an XRO lull before? Lol

[nextbigthing]

NewGuy, member since last month. How long have you been watching XRO? Have you never seen an XRO lull before? Lol

One month as newguy, six months as Brighton Early.

[Xerof]

Robbo mate, length of membership does not reflect experience.....choose your fights carefully

[couta1]

Tell ya what's caught my attention:



Buyers
Buy Quantity
Prices




2
100,000
$36.500



Yeah that stood out like pissholes in the snow,someone thinks its good value at $36.50

[SirPrize]

Where's Casnio at? I'm sure he can shed all kinds of different lights on why it's dropping. :)

[nextbigthing]

I'm intrigued to know why you think I am this brighton guy? I can categorically say that I am not, and there is at least one other member here that knows me IRL and can vouch for it.

Do I have a similar posting style or something?

Just having you on mate. Similar attitude and uncanny timing re his departure and your arrival.

Sorry for the off topic departure people, back to it.

[robbo24]

Robbo mate, length of membership does not reflect experience.....choose your fights carefully

I never said it did. That's your inference, not mine...

[couta1]

Long term I believe the story,hasn't been proved wrong yet and if I hadn't sold out at $18 I could have retired or purchased a second property freehold,food for thought aye,and the same analysts who still believe Methven is an out perform well your got to ask a few questions don't you:cool:

[Copper]

All good mate, I feel like I give as good as I get, so I'm not that worried.

Also I hope you don't feel like you are shot down as such. I think discussion is good for the thread regardless of opinion. If it turns out you are correct then at least you can feel good that you did warn people. The trouble really is, and why people may be a little harsh to react to opinions like yours, is that many people have come on this thread with poorly researched (sometimes clearly not researched at all) opinions with statements such as people are fools to invest in XRO. XRO shareholders and forum users have had to put up with that rubbish for years now, and time after time it is not them that have actually been made to look the fool. Hope you can see the history.

Keep up the posts mate, so long as its constructive, I believe you will be treated fairly. In saying that, no matter what thread anyone pops up on with sentiment that doesn't sit well with shareholders you will always be up against it....and likely come across one or two that are unfair.
Personally I would keep that in the library .A well thought out and constructive post.IMHO.
regards Copper.

[Toasty]

Speaking of unresearched opinions. What's with the logo in the Microsoft Cortana presentation? Personally, I read this as signs of a Xero takeover of Microsoft. The t-shirt is a dead give away.

http://www.stuff.co.nz/technology/digital-living/60032897/microsoft-reveals-sirilike-phone-feature

Disc: I have never done anything that may remotely resemble research preferring instead to trade on speculation, rumour, fear and greed.

[vorno]

Long term I believe the story,hasn't been proved wrong yet and if I hadn't sold out at $18 I could have retired or purchased a second property freehold,food for thought aye,and the same analysts who still believe Methven is an out perform well your got to ask a few questions don't you:cool:

Like all things mate, can't have the ifs' & buts' - You reached your target profit goal and it was good to stay at that level at that time. Too many people have lost a lot of money because they think "just a bit more".

... and like Bitcoin, you cannot see past this hill!

[Bilbo]

Yeah that stood out like pissholes in the snow,someone thinks its good value at $36.50

And they have been snapped up. Only time will tell whether the seller or buyer was right.

[psychic]

Tell ya what's caught my attention:



Buyers
Buy Quantity
Prices




2
100,000
$36.500



Yikes, someone just accepted a big chunk of that bid

[vorno]

Yikes, someone just accepted a big chunk of that bid

Yeah I was out to lunch, did it all go?
- Just a small amount left now it seems

3
15,375
$36.500

[SirPrize]

Didn't they cancel it?

Thought I saw they changed it to 36.000 and then cancelled it all together.

[couta1]

Hasn't hit my stop loss yet,would hate to sellout and for it to head back over $40 next week which could happen once its horribly oversold

[psychic]

15k left but a few transactions going though above that as I write

[nextbigthing]

I only loosely follow Xero but if the fundamentals haven't changed then this must be a great buying opportunity?

Disc; Not holding.

[psychic]

Didn't they cancel it?

Thought I saw they changed it to 36.000 and then cancelled it all together.

No, sale for about 50k took half then others followed to get another 30k or so

[couta1]

15k left but a few transactions going though above that as I write
That's a new bidder,the other 100k went like hotcakes,hit 36.10 low,man this is exciting watching this swing around wildly a heap of keen buyers out there

[PlatnuM195]

Didn't it drop from $40 to $30 in a matter of days a few months ago?

[Southern_Belle]

Didn't it drop from $40 to $30 in a matter of days a few months ago?Yes, the last 2 weeks of November to XMAS it was volatile and went from $41'ish to $29'ish. It then started off the New Year going to record highs. Not sure what is driving the downward pressure but definitely seen this volatility before.

[couta1]

Broker(s) came out yesterday doubting targetted customer numbers would be hit.
Moosie have you been in the bush for the day,read above posts re this:cool:

[Snow Leopard]

Moosie have you been in the bush for the day,read above posts re this:cool:

5662

I worry about your orientation preferences.

Best Wishes
Paper Tiger

[robbo24]

Broker(s) came out yesterday doubting targetted customer numbers would be hit.

Same ones that valued DIL at $6-8 even after restatement announcement?

Chortle.

One sincere question I have is this: Brokers say Xero may not hit it's growth targets, on what information do they base this view?

[Snow Leopard]

Went through the lowest of the stops that I had on this speculative share.

Where is she going?

Best Wishes
Paper Tiger

[couta1]

Trailing stop of 15% of $40 PT?

Noticed that it hit (and passed through) MA100 today in the first time for, literally, years. Oh dear!
I noticed that this morning but seems to be the case with the other tech stops also,you'd think Xro will be heavily oversold in a few more days at this rate?

[couta1]

Same ones that valued DIL at $6-8 even after restatement announcement?

Chortle.

One sincere question I have is this: Brokers say Xero may not hit it's growth targets, on what information do they base this view?
The same info they used to decide that Methven is a growth company and rated outperform,reeeeeaaaallllyyyy?

[robbo24]

Trailing stop of 15% of $40 PT?

Noticed that it hit (and passed through) MA100 today in the first time for, literally, years. Oh dear!

But moosie_900, it's a hammer pattern on the chart.

I thought you'd be banging the drum in the other direction?

[robbo24]

If the US market goes upwards because of the payroll numbers on friday, maybe. But people listen to brokers and their forecasts, especially since Xero "can't be valued". I'd like to look at what they have to say...

But moosie_900... It's a hammer.

Slow stochastic makes the move back towards acquiring market.

Rsi shows oversold.

MACD begins a turnaround.

Relatively high volumes.

Whatever happened to the moosie_900 I knew a week or two ago, the one that only uses the charts...

[couta1]

[QUOI E=moosie_900;471860]Welcome to the new, improved Moose who uses all availabe knowledge to make sound investment choices. :)

Just looked at a line rather than candlestick chart. Pattern looks like a bearish Gartley to me (haven't measured it out yet though; anyone help?)[/QUOTE]
Can i put in a request to have the old bullish Moosie back please:cool:

[Xerof]

Welcome to the new, improved Moose who uses all availabe knowledge to make sound investment choices. :)

Just looked at a line rather than candlestick chart. Pattern looks like a bearish Gartley to me (haven't measured it out yet though; anyone help?)

nope, not a bearish gartley. Try a bullish butterfly, and tell us where point D is please moosie!

starter for 10 - point D is where you BUY

5663

PS : no correspondence will be entered into...I'm over harmonics.

my old FX mate peat is still active on the FX threads moosie. I suggest you take the discussion to the Gartley thread that (I see) I started!! for further indoctrination

[couta1]

When Moosie becomes Bearish on XRO I'm getting jittery,keep the faith couta and watch like a hawk:scared:

[JohnnyTheHorse]

Lots of negative divergence (bearish). Who knows what'll happen though :)

[Snow Leopard]

Trailing stop of 15% of $40 PT?
Strange idea!

More likely a 16% trailing stop of 4 day EMA of closing prices - I think.

Best Wishes
Paper Tiger

[Bilbo]

Broker(s) came out yesterday doubting targetted customer numbers would be hit.

Are you talking about the Credit Suisse report. Have you read it?

[tomblu]

Hi Guys, I have enjoyed following your banter for a while and have owned Xero since 2009. Can you tell me where you got the depth table posted by vorno a few posts back.

[psychic]

Hi tomblu, think many of us here use the live interface provided through the likes of Direct Broking

[SirPrize]

Xero finishes year up 83% to $70m


https://nzx.com/files/attachments/192080.pdf

http://i.imgur.com/G2MoA.gif ?

[Shore]

284,000 customers as at March 31

18,000 in North America, up from 6000 same time last year.

[Shore]

Also interesting to see how much the strong NZD is impacting on Xero


On a constant currency basis Xero grew operating revenue by 92% in the period.

[Shore]

As per the Herald article a couple of days ago, I'm not sure what the 'three analysts surveyed by Reuters' were looking at when they said Xero would miss targets? I don't see anything in those numbers to indicate they've fallen off the boil? They start '15 with $90+m ACR and the North American numbers are up 200%... story looks to be on track to me?

[winner69]

I reckon 292,458 from my trusty spraedsheet

Would have been 292,459 if mate hadn't terminated XRO because it was so useless

Maybe churn is not unusual for the beautiful accounting software

Wasnt far off ....want an update for next round?

[luigi]

Is this the first time they have split US and ROW?


First time they have split out North America from ROW. Not sure about U.S/Canada split...

May also be the first time revenue has been split by region showing average revenue per customer by region.

[Bilbo]

Will be interesting to see what the market thinks today. Hard to predict with the Nasdaq being off 1% overnight, but I expect the sell off in XRO over the last week is a case of sell the rumour which was fueled by some analyst negativity, and will hopefully be followed by buying the fact as I numbers all look on track. I am definitely feeling a little more at ease in holding for the long term, but we really need to see US growth really taking off in the coming year.

[Shore]

Very exciting, if they can maintain a circa 80%+ growth rate we could be looking at a cool half-mill this time next year! The BHAG suddenly doesn't seem that far off.

[Toasty]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11232128

"Xero loss doubles as staff numbers jump"

Talk about put the worst possible headline on an article. What about "Customer and revenue numbers jump"?

I notice that the analysts now polled by Reuters rate it a hold. Quick change of mind or different analysts?

[robbo24]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11232128

"Xero loss doubles as staff numbers jump"

Talk about put the worst possible headline on an article. What about "Customer and revenue numbers jump"?

I notice that the analysts now polled by Reuters rate it a hold. Quick change of mind or different analysts?

You're being to kind on them. Quick change of mind my foot. Full of shiz, yes. I have been put off "analysts", all it takes is a look at the weekly stock picking contest to see that. Journalists are not better.

[Shore]

That's been the pattern Toasty.. "loss widens".. "further losses expected".. as if it's a surprise. Xero announce they are going to make a loss well in advance... the journalists should take some time to review the data and try and pick out the details that matter rather than the ones that appeal to the lowest common denominator.

[Bjauck]

In the past year XRO revenues up 83%; loss more than double; yet in the past year the SP is more than 3 times what it was a year ago! There seems to be an incredible amount of expectation still built into the SP.

[robbo24]

In the past year XRO revenues up 83%; loss more than double; yet in the past year the SP is more than 3 times what it was a year ago! There seems to be an incredible amount of expectation still built into the SP.

Spending on growth is in the air and cash in the in the chamber.

Growth mode is ACTIVATED.

[couta1]

Have been at a funeral all morning so have just read news all good and on track once this global tech stock selldown has run its course watch the price head north significantly again i reckon happy to have hung in there

[couta1]

T i think the global selldown is holding the price down for sure, you only have to check A2 and SLi etc to see this confirned , those buying Xro at current prices will be richly rewarded i believe

[Casino]

I am positively surprised by the update. Revenue came in a bit higher and loss a bit lower than I estimated. It is very nice to see that they reported ROW and North America separately.

[Casino]

Did you notice that customer growth jumped back to around 17k per month from around 13k in Dec? Is this a seasonal effect?

[Banksie]

Did you notice that customer growth jumped back to around 17k per month from around 13k in Dec? Is this a seasonal effect?

If they are taking on existing businesses, rather than new businesses, I would expect growth figures to jump just after a tax year end.

[tzbang]

Do they have a timeframe target to hit 1 million customers?

[robbo24]

AND - if the share price is still around $40 when it hits 1 million customers (and hence reaches an estimated profit of $50 million p.a.), the PE ratio will only be 100. Sweet deal :cool:

Is that your estimated profit, or theirs?

[Snoopy]

AND - if the share price is still around $40 when it hits 1 million customers (and hence reaches an estimated profit of $50 million p.a.), the PE ratio will only be 100. Sweet deal :cool:


New Guy, as a starting point I think you would have to look at the price that Xero last recapitalised their company. That was when Peter Thiel et all boosted the seed capital of the company by around $18 per share when the subscribed for new capital IIRC. These people aren't fools and obviously thought that getting in behind Xero would reward them. Also accept that the Saas model can have a relatively low cost base for the income that can be generated. Hence a high PE as a company like Xero grows could be expected. Rod Drury says that capital raising has finished and that he now has enough money to see Xero through to being cashflow positive. It is fantastic that someone from little ol New Zealand has put together a software/cloud company in little ol' New Zealand that not only he thinks can take on the world, but those who backed his vision with their own capital do too.

From an investor viewpoint going forwards starting from here , the outlook is very different. There are a lot of people on this forum who would willingly pay twice as much for Xero shares as the international backers did. Perhaps they feel they are twice as smart as Thiel and al? Personally I doubt this is true. Personally I invest looking for value and there is none to be had here. IMO the company is so far above any calculated valuation it is a waste of time to analyze it. Best use your skills elsewhere I think as you will never convice 'the converted'. You have made your point. Now you can leave the Xero thread, or get more and more frustrated by staying.

SNOOPY

[Shore]

From the NBR
Analyst sharpens concerns about Xero’s US prospects, sees possible shareprice fall to mid-teens (PAID)

Honestly. Does Keall & the NBR ever both to report on the hundred interesting things Xero are doing, or are they content to just give a soapbox to ever no-name analyst off the rank who wants to make a headline... and then shove it behind a paywall. A truly global technology company grown right here in NZ, a fantastic story, and this is same rinse-and-repeat news cycle that our 'leading' business source can drum up. How embarrassing.

[Shore]

Nick Lewis is a CFA and knows his ****.

I'm not sure he does if he's pegged Xero's value in the mid-teens, below that at which Thiel etc invested close to $200m? Don't see the logic there.

[Shore]

Mate if you worked at any decent corporate...

No thanks.


...or had any cash you would have read the article

Having cash and purchasing an NBR sub are most definitely not mutually inclusive.

[BlackPeter]

New NBR article on XRO - interesting analysis:

http://www.nbr.co.nz/article/analyst-sharpens-concerns-about-xeros-us-prospects-sees-possible-move-mid-teens-ck-p

[Snoopy]

Snoopy, perhaps you should consider the return investors such as Thiel et all expect from investments such as XRO. The you might start to get a sense of why investors are happy to hold/top up at these prices then.

The other thing that surely needs to be pointed out is that you are on record saying XRO, even at $5 is a bubble. In the above post however you agree Thiel et all are not fools yet they are happy to invest millions at $18..... So how does any of that compute? Seems like you have either massively back tracked or you are saying you are at least 3 x smarter than Thiel (using your weird logic :confused: ).

Tumeric, my $5 valuation was based on 'conventional' company valuation techniques. Since Xero is not a conventional company I have concluded that 'conventional valuing' may not apply. Conventional valuation techniques may be conservative for Saas companies. So yes I have backtracked on my $5 valuation for that reason. I don't know what the value of Xero is, and because I am not an expert in Saas, I am not prepared to guess. I do take notice of those that are internationally recognised experts in their field though. So I am prepared to put some weight on $18, simply because real money was stumped up and fed into the company at that price. That was at the height of Saas popularity mind you. For that reason I wouldn;'t be comfortable with paying anything higher than $18 for Xero.

SNOOPY

[winner69]

Here's how oe guy values SaaS companies
http://www.scalevp.com/a-valuation-framework-for-saas-companies

Main factor to consider is the growth decay one.

I like the hig / expected / low road approach and assessing a likely outcome from there.

As i sad on thatvthread some time ago tHis framework worked fine for me with DIL

For XRO probably best to do this sort of analysis by regions, seeing they are at different stages off a growth cycle. Might be a better approach than just using the current 85% total. But whatever growth rates will "decay" in all regions

Might make a quick model up for XRO tonite

[couta1]

Mid-teens? Man, Thiel and co would be fuming if that happened!
Bit of a doom merchant,just as well his opinion isn't going to determine the Xro share price,they are still doing the business as planned,should be back over $40 by the end of next week once the latest news is digested aye:cool:

[Casino]

I'm not sure he does if he's pegged Xero's value in the mid-teens, below that at which Thiel etc invested close to $200m? Don't see the logic there.

Wait - can these two seemingly very diverging assessments perhaps be reconciled (no pun intended)?

Thiel valued Xero at $18 in mid-2013 (perhaps unaware of Intuit's harmony launch).
Only 6 months later, Nick Lewis thinks a valuation in the mid-teens ($15? $18? $13?) is a possibility.

[Copper]

This is starting to get like the Snakk thread in the old days.Look at it.The figures are out,the price is what it is ,all the instos know what is going on.Surely this is now almost an international market but a few posters are betting against that reality . Only time will tell.Time to settle a few nerves in my opinion before it gets to all the mud slinging that I can see coming.

[couta1]

This is starting to get like the Snakk thread in the old days.Look at it.The figures are out,the price is what it is ,all the instos know what is going on.Surely this is now almost an international market but a few posters are betting against that reality . Only time will tell.Time to settle a few nerves in my opinion before it gets to all the mud slinging that I can see coming.
Yep seems a lot of reaction to some analysists opinion and how many of those devaluing XRO have put their money where their mouth is and have skin in the game?

[Valuegrowth]

I found following interesting article. Can anyone explain this further? I would like to learn more about cloud computing. Thanks.

http://www.workintelligent.ly/technology/cloud/cloud-computing-myths/

The cloud is everywhere.

Is it a kind of buy the dip stock?

Please note that I do not endorse or take responsibility for material in the above hyper-linked site. Please do your own research.

[robbo24]

Love the gif's SP, quite a lost art form these days!

I see a good ol' fashioned throwdown here. Robbo is fresh off some successful Moose hunting in the DIL forest. Think he can repeat it here with Xero?

I think mid-teens is ridiculous. $45 is a bit high. Can we keep hitting 80% growth for the foreseeable future? I think it's certainly doable.

$44 is the new $40.

I think it's going to to back to $40.

[robbo24]

Have a good feeling about the US economy tonight robbo?

It's a mixed bag, last I heard improving US job statistics were bad for equity markets.

However, with the NZ dollar being down 1.2% it may make NZX buying a little bit cheaper for the big NZ buyers.

[couta1]

Love the gif's SP, quite a lost art form these days!

I see a good ol' fashioned throwdown here. Robbo is fresh off some successful Moose hunting in the DIL forest. Think he can repeat it here with Xero?

I think mid-teens is ridiculous. $45 is a bit high. Can we keep hitting 80% growth for the foreseeable future? I think it's certainly doable.
Hey Moosie remember a couple of weeks ago you were looking for that run up to $50, so now $45 is a bit high? Nothings changed except for a temporal global sell down of tech stocks,XRO confirmed growth on track:cool:

[longy]

America's market is the next target of growth right? Well, income was up so did cost but this company is still on the growth phase right? In line with forecast. Plus over 200mil in cash on hand... I could not see what are the major issues? I feel this company is going to be fine... but... it is only my opinion.

[Bjauck]

....No I won't provide you my research for free. ...

Plenty of posters don't mind sharing their research and thoughts. Turmeric certainly has and it is what discussion boards are for, in my opinion, as opposed to name calling.

It looks like some researchers are getting a bit restless to see material inroads in the US market if this article is anything to go by: http://www.stuff.co.nz/business/industries/9907101/Analyst-doubts-Xeros-future-in-US

[winner69]

Have a good feeling about the US economy tonight robbo?

Moosie, you been getting us all excited about the jobs number

Some 192,000 jobs is pretty good so that's a relief

XRO next week ..... up or down?

[Arbroath]

$35 Monday is my bet after the clean out on Nasdaq last night - worst day in a while and the momentum stocks led it lower...


This article sums it up nicely for me. Couldn't agree more etc.

[psychic]

I hadn't read this snippet from the Herald Yesterday, sorry if it has already been posted

Goldman Sachs has started its coverage of Xero with a sell recommendation. Previously only two broking firms have offered research on the cloud accounting software provider, but its move into the NZX10 and into a range of international indices means there will be a lot more demand for information on its stock.

Goldman analyst Robbie Aitken said in a note that while his company acknowledged Xero's strong growth prospects and product quality, investors were paying for significant delivery in end markets.

"Previously Xero provided a less expensive option to play the growth in cloud accounting software, but at current levels given we believe investors are already paying over the odds."

Aitken put a valuation on the stock of $32.23 a share. Xero shares closed at $44.98 on March 10 but have fallen in the last week. Yesterday they closed down 80c at $37.20.

[SirPrize]

Check out @roddrury's Tweet: https://twitter.com/roddrury/status/451985735201988609

[JohnnyTheHorse]

I would say that she's heading for a reasonable correction (maybe down to $30 or below, thats just a guess though). I say this for a couple of reasons:

- Major negative divergences with price vs. MACD, RSI, DMI etc. The runs are getting weaker and she's running out of steam. Maybe Hoop can inform other better around this?
- Seemingly good announcements are having negative impacts on price. People now want out, they aren't just buying because there is an announcement of any sort.
- Technicals point downwards.

This stock is very sentiment driven. If that sentiment turns, then get out (think of DIL). I could certainly be wrong and it may keep going up, but it is wise to set stop losses to make sure that some of the massive gains some of you guys have made don't get eroded.

I have no views on what the price of XRO should be. I have not researched it enough lately to have a good indication and it appears that the range would quite simply be massive. I hope Xero succeeds, NZ needs more companies like it.

[Valuegrowth]

There are sell off in global tech stocks now. Technology stocks from Google Inc. to Yahoo Inc. has plunged. The Nasdaq Composite Index went down the most in two months. Biotechnology Index too dropped badly. Market players are moving away from overvalued sectors and stocks now.

http://www.latimes.com/business/la-fi-wall-street-20140404,0,7001918.story#axzz2xy8jOLGh

Tech stocks, once highfliers, drop; Nasdaq sinks

http://online.wsj.com/news/articles/SB10001424052702303847804579479750391310982?mod=eu rope_home&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB1000 1424052702303847804579479750391310982.html%3Fmod%3 Deurope_home

Value Stocks Head Higher as Growth Companies Look Pricey.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please note that I do not endorse or take responsibility for material in the above hyper-linked sites. Please do your own research.

[robbo24]

There are sell off in global tech stocks now. Technology stocks from Google Inc. to Yahoo Inc. has plunged. The Nasdaq Composite Index went down the most in two months. Biotechnology Index too dropped badly. Market players are moving away from overvalued sectors and stocks now.

http://www.latimes.com/business/la-fi-wall-street-20140404,0,7001918.story#axzz2xy8jOLGh

Tech stocks, once highfliers, drop; Nasdaq sinks

http://online.wsj.com/news/articles/SB10001424052702303847804579479750391310982?mod=eu rope_home&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB1000 1424052702303847804579479750391310982.html%3Fmod%3 Deurope_home

Value Stocks Head Higher as Growth Companies Look Pricey.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please note that I do not endorse or take responsibility for material in the above hyper-linked sites. Please do your own research.

Which part is your ideas?

[Valuegrowth]

It is a crucial time for overvalued global markets specially overvalued tech stocks with expanded P/E ratios. What are the options available in markets? Are we going to target value stocks, commodities or currencies? If it is so what are the value currencies, value commodities or stocks? Is it time to play defense? Will there be 10% to 20% correction?

Is it a kind of buy the dip for tech stocks or another opportunity for tech stocks? Cheers.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.

[winner69]

It is a crucial time for overvalued global markets specially overvalued tech stocks with expanded P/E ratios. What are the options available in markets? Are we going to target value stocks, commodities or currencies? If it is so what are the value currencies, value commodities or stocks? Is it time to play defense? Will there be 10% to 20% correction?

Is it a kind of buy the dip for tech stocks or another opportunity for tech stocks? Cheers.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.

Marketwinner - definitely time to top up on ME (Marrakesh Express) - stood the test of time and great value at the moment and does well when the market is a bit dodgey

[Valuegrowth]

Hello winner69

Can you remember I said?

“I am not with current hot stocks and I am with future winners.”

Anything boring great value is there I like it. Boring is very beautiful in global markets now. There are undervalued boring stocks, commodities and currencies.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.

[blackcap]

I just think XRO might take a little dive over the next few week. Would not be surprised to see it go to the low $30's. The price now (in my opinion) is reflecting a lot of positive news that if does not eventuate may further increase price weakness.

[winner69]

Quick number crunching.

The output is purely mathematical. No emotion or fiddling to achieve any desired outcome as most analysis does. Nor does the inputs or outputs represent any of winners views on XRO. Winner just wishes the company to be a great success for the good of Wellington and New Zealand

Based on the assumption that a 'growth decay' factor exists (thing that what smokin was saying the other night). I have taken current annual growth rates and applied a 85%, 80% and 75% 'growth decay' factor. I have done this by geographies as reported by xro. This allows for different stages of maturity of each market.

The other view is using 2 year growth rates and applying a 80% 'growth decay' factor. Using a multi year growth rate would be a preferred way to do the scenarios but requires a lot more number crunching.

Output is below. The chart and numbers are customer numbers by year

As I said a mathematical exercise and nothing else.

Taking 2017 as a point in time number of customers range from 945k to 1.818k

Say $300 per customer - so sales of $280m to $540m

All it says that $4 billion plus market cap needs an awful lot to happen to justify it.

Looking at the numbers this methodology results in low numbers in North America compared to Australia. Probably means other methodologies have to be used to estimate future revenues.

Rod seems happy with 80% growth this year .... even Rod seems to be signalling that 80% this year. Not really good enough Rod.

I have no intention of buying any more XRO shares at $30-$40 or more

[Shore]

I'm not sure that modelling provides any useful analysis. Xero's path is very unique in that it is attacking markets in an upward ascendancy rather than simply flat or linear. It is counter-productive to talk about growth decay rates now when you look at Xero's stages of entry within its various markets.

There's also an expectation with regard to Xero's USA entry that seems to be misunderstood by many posters here.

At the moment, Xero has achieved dominance in NZ. It has won the war here and has taken the market. It is still posting 100%+ growth in Australia and is the leading cloud accounting provider there and, IMHO, will become the leading accounting vendor there. The UK is the engine for the next 1-2 years in terms of bolstering customer numbers. The market there is substantially bigger than Australia's and they are only just now beginning to dig their claws in. They've got brand recognition there and the snowball has well and truly began its roll down the hill... 114% growth and it is likely this will increase for the next FY. Big numbers will start to come from the UK. Along with OZ, this is Xero's turbo button to get it to the half-mill.

When we talk about the US.. they've tripled their numbers from 6000 to 18000 in one single year. I don't believe any of their previous markets (NZ, OZ or UK) posted numbers like that this early in the process. What people have to remember is this is not a consumer play - it's not going to be driven by some viral phenomenon etc and explode with sudden stratospheric growth. It is going to be achieved through simple hard graft by building out their partner channel, fostering that tight community of professionals, and letting them drive the growth. The 200% growth in the US shows that the solid foundations have been put in place and now they can begin to push hard. The US listing could be a big spark to the powder keg if the timing is right and add further fuel. But in terms of customer numbers, the US mightn't start to show a meaningful contribution to the overall Xero picture for another 12-24 months.

As for competition with Inituit... well.. I think it's all a red herring. Xero are carving out their own segment with their own breed of partners who have grown in a new era of technology and are looking to break out from underneath the shackles of software from the last century. Even if Intuit have been a little more forward thinking than MYOB or Sage, they've still exhibited a complete lack of understanding with regard to how to execute or maintain a cloud accounting platform. It's just not in their DNA... it's a whole different beast. Xero doesn't need to win all Intuit's customers, though that would be nice. Xero just needs to plug away like its doing. Already it's clear to see there's a partner channel in the US receptive to what they're doing... in my mind it's inevitable that this will grow and grow and grow, and with the momentum Xero is achieving elsewhere around the world, I'm very confident of their long term success.

On another note, I think the whole fixation on value is also a waste of time. A year ago Chris Keall asked if Xero was worth a cool half-billion. If you asked him that now, he'd probably say absolutely yes.. but also ask yourself, what's changed from a year go? Nothing. Xero's growth has been steady, their product hasn't changed, they've achieved what they've set out to do. While there isn't any direction on profit (and won't be for some time), Xero's market cap is driven purely on the basis of amount of people who want to get in on the Xero story versus the number of people who want out of it. Ask Chris Keall if he thinks Xero is worth a cool 5 billion? Of course he'll say no, as will most, but conjecture about the merit of its market cap ends up leading people in circles.

[winner69]

shore - I said it was just a mathematical exercise, but at least I did it by geography and not just on the total number. Even this means that 2015 growth is greater than 2014 growth, even after applying a 'growth decay' factor

It was smokin cubans who upset everybody on Friday saying things cant go by 80% a year up forever. That's where 'growth decay' comes in, and even then the output is far from linear.

As I said maybe not entirely an appropriate methodology. OK for NZ and Australia but as you say UK and US are just starting out.

Even though a mathematical exercise the value of it does highlight the enormous potential of XRO

If we boosted US and UK numbers a bit for 2015 and 206 before applying a 'growth decay' factor the top line on my chart would show 13-14 million customers in 2020. Far cry from 0.3 million now eh. Maybe annual sales of $5 billion. Share price of ? - who knows. Good stuff eh

Those guys at NBR seem to be piss you off a bit Shore - hope you not taking it personally

[Shore]

With reference to the share price fall to the mid-teens - the NBR deliberately picked out the most scandalous comment made by the analyst... and, knowing full well it was a highly unlikely scenario (which the analyst had to come out and admit to defend himself), shoved it behind their paywall in a desperate attempt to convert a few fools into parting with their cash. It was gutter journalism IMHO. It does piss me off and I won't be apologizing any time soon for expecting more from our supposedly 'pre-eminent' business magazine.

Anybody taking any of this personally needs to find themselves a new hobby!

I agree with you on your other points... I accept it was a mathematical exercise. As you said, it was smokin cubans comment that pre-empted me - I just felt it worthwhile to lay down (which others have done as well) the truth about the different stages of entry Xero is at in its various markets.

[couta1]

What a breath of fresh air your posts are Shore,some of these analysts sound like they've got tall poppy syndrome,I find myself in a difficult position at the moment with my XRO shares with a buy in of $42 and the price hitting $36 last week,I don't want to sell out my remaining shares for a loss as even if the price hits the low $30s we all know it could rebound quickly once the macro situation improves,not looking forward to the coming week but its nice to get a bit of inspiration from your posts,cheers

[Shore]

Thanks Couta.

Yep it's been a wild road being a Xero SP holder and the roller coaster looks set to continue, but I hold purely on the basis that I believe Xero is building for itself one hell of a business and it's story is far from over. We're only at the beginning of a very long journey. Non-tech people on this forum may not appreciate this fact as much, but Xero have world class talent executing an impeccable product. From the design and usability all the way through to the back-end. Make no mistake - it's not an easy thing to build and maintain a system like this and manage the complex data that they do - remember, this isn't blocks of text. QBO is already demonstrating what a challenge it is to serve up complex financial data at scale... it is a completely different proposition to shipping boxed software. Trust can be eroded in an instant, users will give up and look elsewhere, and the partner channel especially will lose faith that you can cope. This is why I continue to hold and am excited for the future - because everything is in place - the product, the team, the talent, the roadmap, the possibilities are truly endless once they become the true small business platform. It's also why I get frustrated with the bickering over Xero's market cap because people begin to denigrate the product and the company simply because they believe it's overvalued, and that just makes no sense.

Yes I'm bias, but only because Xero is precisely the type of company that we need to champion. The internet levels the playing field for New Zealander's. We're always on about how innovative and inventive we are, but in the past that's done us little good given our distance from the global economy. That's all changed now. Companies like Xero represent an opportunity to put our strengths to the test, compete on the world stage and most importantly, secure a bright and prosperous future. There's plenty of smart people in distant shores that can see this (Thiel, Matrix, etc) - it's just a shame many in our own country can't.

[apac]

This might sound a bit arrogant but don't get me wrong. I have been successful almost all my life and most people expect nothing less from me, although others often have more confidence in me than myself but things have always turned out great. And I'm sure if you are not someone like me you probably know someone like me. Think of anyone with high grades, rich or successful.

For investors in Xero there's always a fear of it not meeting targets and SP plummeting but my thoughts are that with the proven leadership and execution it's possible it will just keep succeeding year after year. $4 billion market cap may be a fraction of what it will be worth in a year, 2, 5, 10, 20 years time. We may look back in hindsight and say Rod/Xero has done it again and again and again.

What I'm hoping is Xero's share price can continue to go up and even if it just goes up by say average 10% for the next 20 years and I can retire from my holdings.

Of course it's very likely we will see share price go up more than 100% in some years and negative in some years. Will Xero go up to over $100? I believe so, just because of hype. US domination will mean well over $100, and world domination will mean more. Possible? Anything is possible, Xero could be one of the best shares in history, and it could also go under, but in the short term the hype will keep driving the price up, and results will drive the price up even more.

In a year's time I believe SP will be much higher than now and Xero may forever be in a bubble that doesn't burst.

[Bjauck]

What I'm hoping is Xero's share price can continue to go up and even if it just goes up by say average 10% for the next 20 years and I can retire from my holdings. I hope that will, at the minimum, happen for all the shareholdings I buy! I have IFT and they have returned over 10% pa over the years. However it was a "value" company without too much drama. It is also a dividend paying company. With a (currently) non-profitable "growth" company such as XRO, much of the decision as to whether you are a shareholder seems to be predicated on whether you are a "believer" in its "story".


I have been successful almost all my life and most people expect nothing less from me, although others often have more confidence in me than myself but things have always turned out great. And I'm sure if you are not someone like me you probably know someone like me. Think of anyone with high grades, rich or successful So, what were you successful in? Everything or one particular field?

[winner69]

If my non 'useful' mathematical analysis does turn into reality XRO will have more than $5 billion annual revenues in 2020 with a market cap of say $30 billion and if no new shares are issued a share price close to $300

Good eh apac ....that's more than 10% pa

[Harvey Specter]

If my non 'useful' mathematical analysis does turn into reality XRO will have more than $5 billion annual revenues in 2020 with a market cap of say $30 billion and if no new shares are issued a share price close to $300interesting.
How are you turning revenue into market cap - P/E, R/E or DCF and was rate are you using.

[blackcap]

With you there New Guy. My brother uses XRO for his professional practice which he has recently started and swears by them. It is just an amazing package he was telling me about over the weekend. But no matter how good the product is (and yes XRO has done very well) competition will alter/change/evolve and adapt. Nokia anyone?

[Bilbo]

That's all good and well, but you're missing an important part of the story - xero does have competitors, and they will be responding to xero's increasing market traction with fierce rivalry. That alone could fundamentally alter xero's future profitability no matter how good its product is.

Indeed, while I use xero for my own business - and love it - I would be naive to think that none of the other more established packages won't soon outdo them. And, if they do, the xero bubble will pop.

NewGuy, the problem with competitors pushing hard to compete could be that they push too hard with a product that is not designed from the ground up to be a SAAS product, and with an organisational culture that does not understand the new model. This could lead to disaster. There have already been many reports of outages with QBO. If their back end architectural and infrastructure is not up to it they will have issues. If you can't access your accounting system for days on end and when you do it is slow, you will go elsewhere very quickly.

To date Xero have executed to plan which gives great confidence that they will continue to do so. Everyone is banging on about how Intuit are now competing and will lift their game and this is a risk for Xero, but why not look at it the other way round. Xero will lift their game even more now that Intuit are responding, and there must be a huge risk to Intuit. It is usually easier being the challenger without a position to defend. It I were an analyst with GS or CS etc I'd be thinking about putting out a research note on Intuit saying there is a risk of their shareprice dropping to the mid teens if they failure to repel competitive challengers :)

[Shore]

That's all good and well, but you're missing an important part of the story - xero does have competitors, and they will be responding to xero's increasing market traction with fierce rivalry

Just like MYOB have done? Or Sage are trying to do? I think Xero has done enough now to prove that it come in and disrupt the incumbent and not only steal their market share aware, but more importantly, carve out a whole new segment for themselves (40%+ are customers coming from no accounting software at all). Remember, MYOB are part of the Australian lexicon almost and they have been the default go-to provider for a quarter century.. and Xero has come in and destroying them. Yes, destroying. Intuit's attempt to low-ball their product to Aussie accountants at $5 per month is transparent and insulting and I think they're underestimating what Xero has done to build their partner channel (roadshows, conferences etc).

It's all very well to say Intuit is the sleeping giant and they won't take this lying down and they will suddenly awaken and start stomping all over Xero with their $20b market cap and blah blah... but I think it's besides the point. Xero are primarily targeting a new generation of customers and accountants who aren't beholden to those old brands and their way of business. As an American publication pointed out.. Xero are the apple of accounting.. Xero represent a shift in the way businesses manage their finances. To me, Xero's more direct competition are companies like Kashflow, Wave, Saasu etc.. but even they are showing that they cannot compete with Xero's war chest, it's public profile, and the incredibly loyal partner base it has built.

Talking up the war with Intuit is great for brand awareness and profile, but I don't think they're the concern that everyone makes them out to me. Of course, rewind 15 years ago - if Xero were an upstart company trying to shove a box of accounting software alongside Quickbooks in the US then I would completely agree and run for the hills and declare Xero had 'zero' chance... but it's a different battle. I don't think Thiel, Matrix etc would stump up $200m if they thought the battle was head-on... but talking it up as such is great publicity for Xero.

[Bilbo]

With you there New Guy. My brother uses XRO for his professional practice which he has recently started and swears by them. It is just an amazing package he was telling me about over the weekend. But no matter how good the product is (and yes XRO has done very well) competition will alter/change/evolve and adapt. Nokia anyone?

In my experience it is usually easier for young nimble companies to evolve and adapt than old tired ones. Xero should be able to evolve and adapt better than its competitors. Why is everyone fearful of Intuit evolving while not giving thought to how Xero might evolve and adapt quicker.

[Longhaul]

(40%+ are customers coming from no accounting software at all)

I think this is one of the most important points. Xero doesn't rely on "stealing" customers, they are opening up a whole new market where consideration for XRO over QBO is probably very high. Think how good an opportunity this is for Xero's accounting partners who can also grow their client base significantly via Xero software.

[Bilbo]

Ever heard of the term first mover advantage? Inuit has that in the states, not xero.

Remember IBM, I seem to recall they had first move advantage in PCs too. Remember Friendster, they had first move advantage in social networking, then MySpace did. Where are they now.

[Bilbo]

Remember IBM, I seem to recall they had first move advantage in PCs too. Remember Friendster, they had first move advantage in social networking, then MySpace did. Where are they now.

100s of other examples too in the tech world where first move advantage counts for nothing. E.g. Alta Vista, lycos, looksmart, yahoo etc all had it before Google. Often the first mover is at a disadvantage in tech. It is execution that matters.

[bull....]

Not surprising strenght in the price has been declining since november just like ryman

[couta1]

Ouch - down 3.7% to $36.40 on open
NewGuy are you sure you don't have contacts at intuit because it seems you can't wait for XRO to faulter,nothing unusual going on here,take a look at SLI and A2 and Wyn,macro forces in action
I

[SirPrize]

Should be interesting seeing as every time there was a price drop it didn't take long for it to bounce back up again.

For all the analytical people, here's a gif showing how easy it is for Xero to lift. http://i.imgur.com/Kp0j7Tc.gif

[Bilbo]

the first mover is only at a disadvantage in tech if they fail to innovate, otherwise they tend to maintain an advantage. This is because its easier to sell new products to existing clients than to win new clients from incumbents...

Can you give tech examples to back up your claim. Relevant ones too, where the first mover is on old technology and been able to lead after a change in technology or consumer wishes. Counter my examples of Blackberry, Nokia, IBM, DEC, Compaq, Alta Vista, Friendster, MySpace, Itunes (to be upstaged by Spotify), blockbuster video. Sure there are plenty of first mover winners, e.g. Amazon, but they were startups like Xero challenging the incumbent.

Just rolling our trite concepts like "first mover advantage" as if it was a concrete fact adds nothing.

[tzbang]

Kodak, SonyWalkman, Nintendo, ..oh wait

[Shore]

This is because its easier to sell new products to existing clients than to win new clients from incumbents..

Even if we take this generalization as gospel and apply to this case in particular - it's still doesn't change the fact that Xero is signing up 40%+ customers that weren't even Intuit's to begin with. So even if Intuit can manage to cling on to its existing base as they begrudingly box up their old software and jump on to the fandangled interweb thingy, there's still another train steaming down a different track altogether.

[Bilbo]

trite concept? LOL, it is one of the fundamental tenets of competition.

It is trite when applied to this argument without examples to back it up. I could roll out loads of trite sayings and proverbs that sound knowledgeable until challenged. e.g. the old goodies like "it takes money to make money", "sell in May and stay away", "time in the market not timing the market" etc. All might be relevant in some cases but can't be applied as a general rule.

[couta1]

I think XRO can get its desired market share in the States simply by signing up new customers and picking up most of Intuits dissatisfied customers and that's aside from any aggressive push by XRO,don't underestimate the power of word of mouth

[Bilbo]

trite concept? LOL, it is one of the fundamental tenets of competition.

Here is a little light reading for you NewGuy from the Harvard Business Review:
http://hbr.org/2005/04/the-half-truth-of-first-mover-advantage/ar/1

Some management concepts have such intuitive appeal that their validity is almost taken for granted. First-mover advantage is one such concept. Although the fate of its most-convinced adherents, the dot-coms, offers a cautionary lesson, managers’ faith that first-mover status brings important competitive advantages, even when network effects are not available to accelerate and entrench it, remains undiminished. Business executives from every kind of company maintain, almost without exception, that early entry into a new industry or product category gives any firm an almost insuperable head start.
But for every academic study proving that first-mover advantages exist, there is a study proving they do not. While some well-known first movers, such as Gillette in safety razors and Sony in personal stereos, have enjoyed considerable success, others, such as Xerox in fax machines and eToys in Internet retailing, have failed. We have found that the differences in outcome are not random—that first-mover status can confer advantages, but it does not do so categorically. Much depends on the circumstances in which it is sought.

[Bilbo]

trite concept? LOL, it is one of the fundamental tenets of competition.

In fact, thinking you have first mover advantage and relying on that is the quickest way to becoming first loser. I hope Intuit adhere to your belief that they have first mover advantage.

[Shore]

Phrases like 'first mover advantage' are also so vacuous without giving the parameters. Are we talking accounting software in general? Well I'm sure Excel had first-mover advantage last century when it launched, or are talking about something else? I would argue Xero does have first mover advantage if you define as it being a company that sells hard and looks after a new breed of partner and builds a loyal channel through which to market its products - what Xero is doing in the UK and Australia is completely unique.. and yes it's easy for competition to look at Xero and think "wow they're signing up 500+ plus new customers every single day of the week, we gotta get in on that action, let's discount ours down to $5 to a month and then they'll beat our doors down". If this is Intuit's big strategy then I wouldn't want to be an Intuit stockholder right now.

[Bilbo]

Sorry, I work a busy job and don't have time to research each post. Here's the first link that appeared when I googled "tech sector first mover advantage". Why don't you read it and let us know how "trite" the concept is in the tech sector?

http://web.cenet.org.cn/upfile/55188.pdf

And I reply with http://hbr.org/2005/04/the-half-truth-of-first-mover-advantage/ar/1 as previously posted.

Still looking for examples from you that relates to Intuit and Xero

What I am saying is that you can't just take some bland concept like first mover advantage and say Intuit have it so they will succeed. One could even argue Xero have it as first mover in the cloud accounting market. The Harvard articles states one of the reasons that can be applied to explain why sometimes the first mover has an advantage is "by starting earliest, first movers have more time than later entrants to accumulate and master technical knowledge". It could be argued that after 6 years of working solely on cloud based accounting that Xero have this advantage over Intuit.

[Santiago]

I reckon the UK and Aust numbers alone will drive Xero to well over half a million customers in the next 18 months. UK is just getting started and appears to have crossed the threshold in terms of adaptation. Aust is where NZ was at a few years ago and has a ways to go yet. The US is a different matter and is where the risk and opportunity are for the company. I'm confident they'll crack it by stealing away some Intuit customers (maybe not as many as we hope) and creating new market share (more than is probably anticipated).

Ultimately, if you look at US based companies in the same general space, and I'm not talking the cloud, but rather disrupters and innovators, there are examples like Salesforce which is worth 3 or 4 times Xero, and then there are the failures. Without getting into detailed analysis, I think this one's a call based in intuition and instinct at some level- do you think these guys are going to fail? I don't, and I think the only other alternative to failure is significant success when bearing in mind their product, model and ambition.

Personally, as I'm way long on this, I sort of hope the doubt spreads and the price drops further so I can pick up more. However, it has to be recognized that a dropping price means value destroyed for fellow citizens, which is not cool. Hold on.

[robbo24]

Seems to me like traders trying to short.

XRO marches to its own damn beat, it's gonna close up for the day... Haha

[Southern_Belle]

Ever heard of the term first mover advantage? Inuit has that in the states, not xero.Intuit might be the early bird that got the worm but remember it is the second mouse that gets the cheese.

[lastmoa]

One fact that may have eluded many when they try to calculate the size of the market is that many Xero customers have never used any accounting package before. Add to that the potential people that will convert from their pirated accounting software and the actual market is potentially much larger than actually proposed.
Xero's current BHAG is 1 million customers globally. This is showing as not a big ask for them anymore. I do not see them attaining this goal as a 'winner takes all.' Would be nice, but a small percentage penetration into USA (which they should show traction for this year) will suffice for now. imho.

[Shore]

Don't underestimate the rest of the globe... there's a small but loyal following starting to take place in locations like Singapore, Canada etc... the world really is Xero's oyster.

[mp52]

Xero to date is a great success story and as a Wellingtonian working in the space I personally wish them the very best. Rod is a capable, smart, connected and affable player in this emerging industry and also generous with his time and advocacy in helping other NZers succeed. Wish I'd had the capital to drop into his company back in 2006 when he showed a bunch of us in a business incubator some of the beta software. Although I think at that stage only the Sam Morgan's of the world had their check books out :p.

Anyway - DISC - I'm not in the stock but waiting for an entry point for a small holding. With so much of the value built on the company's potential it's difficult to separate investor sentiment out of forecasts. A lot of the zeal some folks have reminds me of the sentiment around during the dot com boom - phrases like "there's a new generation that..." give me the chills. There's a place for consumer emotion in the product sure, but its a B2B product generally targeted at folks who may be turning over relatively modest revenue, selling on modest margins and who are price sensitive.

Looking at other accounting software providers, even other SaaS providers could prove to be a bit myopic when considering the wider evolution in cloud technology services across tax and revenue, banking, distribution, manufacturing and the like. I just wonder to what extent evolutions in these sectors will disrupt existing accounting practices mid to long term (say 5+ years out) - perhaps even commodifying many of the functions that accountants/book-keepers and smart software currently perform?

IMHO development of partnership and reseller networks is the critical challenge for Xero in the US. As someone noted above - this product's immediate growth rests on the support of accountants and book-keepers to endorse it. Even most SME owners who may not have used accounting software before will still make use of an accountant so winning their mindshare will be critical.

Xero have shown themselves well-capable of winning over those influencers in the Oz/NZ markets from MYOB and making solid inroads against Sage in the UK so there's every possibility they can pull it off against Intuit but the barriers are orders of magnitude greater. It's going to take more than being more sexy and hip than the incumbents though. There are interesting lessons from the past like the rise and fall of Lotus 1-2-3 - innovative and consumer-conscious software, out-performed obvious incumbents then was blind-sided by Microsoft's GUI evolution. Granted, the obvious counter to that is that Xero being cloud-based can iterate often and doesn't have the same threat of platform redundancy as shrink-wrapped software but there are always other similarly significant disrupters in tech.

Success in the US comes down to Xero's ability to simultaneously a) effectively leverage the power of social marketing to reach end-customers and b) effectively lobby the accounting profession to endorse the platform, and c) have the talent and resources to continue to innovate and pivot. Having the likes of Thiel on-board can't hurt for (a) and recruitment of folks like Peter Karpas and Ian Vacin is good for (b) and (c) is in-hand provided they continue to have good forward momentum.

Long term it is probably a good thing that there are modest downward corrections for Xero - it takes the star lust off and ultimately tests( and hopefully builds) its fundamental credibility as a company.

Just my 2¢.

[Casino]

IMHO development of partnership and reseller networks is the critical challenge for Xero in the US. As someone noted above - this product's immediate growth rests on the support of accountants and book-keepers to endorse it. Even most SME owners who may not have used accounting software before will still make use of an accountant so winning their mindshare will be critical.



Great post and sorry for trimming it. 'This product' is not one product but two. One of them is given away for free. It is rarely discussed and easy to miss, which makes it hard to understand Xero's continued success. I still struggle with how to value this beast. Is Intuit hugely undervalued if Xero's valuation is fair? On the other hand, how does Xero stack up as a fit for a social conglomerate compared to whatsapp? It's a crazy world in which many companies have crazy evaluation. Some companies will justify their valuation, some won't. Maybe it's best if people try not to pick just one winner but let's say 5-10.

[Beagle]

Clear and emphatic breech of the 100 day moving average to the downside. Technically this stock looks shot to bits especially against a global backdrop of an extremly weak tech sector.
Watched some American experts talk on CNBC the other day about how this whole nonsense of stocks trading on XYZ ratio's to sales can be hugely problematic when the market corrects as there's no defineable bottom to the market. Witness how far the Nasdaq fell when the tech bubble burst early this century. Another generation of suckers comes along and we have another tech bubble, are people really that stupid to forget to value stocks based on actual earnings ? When will people wake up to the nonsense that as sales are rising so are losses ? where's any evidence that this pattern will ever reverse even in the medium to long term ? How many years before they might break even ?

Two long time experts on the Nasdaq with more than 20 years experience are saying we need to get back to basics ansd value stocks on actual earnings. Downside is huge in my opinion.
Those determined to look for an entry point would be very well advised to wait for the 100 day moving average to breach again on the upside and those sitting on substaintial profits should follow their leaders example and take some profits. Hint, even fervent religious believers follow what their leader did, yet for some reason those who follow this stock with even more religious zeal seem to think they shouldn't follow suit and take profits, go figure...

[whatsup]

Very interesting to know if stop losses will be HIT in the U S tonight, if so could be an interesting opening tomorrow.

[Beagle]

Wasn't aimed at anyone in particular.The nonsense will come to an end soon my friend right about when your local taxi driver tips you to invest in XRO. Some balance is usually a useful thing but as implied some follow this stock with such religious fervour they'll never sell.
If the Nasdaq tunbles hard you won't see a buyer for love or money at any price, just in my opinion of course.
There's better growth stocks which actually have strong growth in earnings than this silly fiasco. It amazes me that well respected fund managers like Milford are invested in this company. Do I think they know something I don't ? Definitly not. Just goes to show how well XRO management have done their sales job on investors. Just keep doubling up on sales and losses at the same time, i don't know why i didn;t think of this business model myself, as you say its been an absolute goldmine.
Meanwhile some companies are growing real profits strongly.

[Shore]

So what's your opinion on First NZ Capital's research into Xero, Roger? Your summary please?

and another question - your comment regarding the losses doubling.. what would you have them do with the $200m in the bank? Let it accrue interest?

[Beagle]

The only other thing to add is that many people (who you call "zeal fervent religious believers") invested in XRO from a very early stage because they believed Xero had the potential to change the landscape of accounting (hence so many accountant investing early). That story has not changed! In fact it is easy to argue that the chances of Xero achieving what it set out to has increased exponentially (as has the SP) over the years. My point is, that, I believe you are mistaking zeal fervent religious belief for simple commitment to the investment vision these people have. If the only thing that has changed is the SP, why would they sell if their vision was to invest in a company they believed would succeed??

Because the SP now grossly overstates the NPV of the company on a balanced view of risks and rewards and may never make profits that justify its current SP. AKA quitting while you're miles ahead.

[Beagle]

Pure guesswork and statistical extrapolation like every other attempt to value this loss making enterprise, in my opinion. Nobody can reliably predict five years out plus so its best to describe this stock as highly speculative, which for seasoned investors should be in the 1-5% of their portfolio catagory, if they still believe in the story.

[Beagle]

So what's your opinion on First NZ Capital's research into Xero, Roger? Your summary please?

and another question - your comment regarding the losses doubling.. what would you have them do with the $200m in the bank? Let it accrue interest?

They're locked and loaded with their business plan but at the risk of stating the completly obvious, that doesn't mean shareholders need to be locked and loaded for the long haul. Shareholders might like to have a little study of how long it took Sky T.V. to break even...
How long will investors in XRO tolerate rising losses and sales 10 years, 15 years, 20 years ? or are they about to lose patience shortly ?...or here''s a thought, now that we have a clear technical breach of the 100 day moving average maybe they've lost patience already ?

[Shore]

What is the possible correlation in business model and market size between Sky TV and Xero?

[Beagle]

None but one is a proven business model, the other is yet to prove anything at all (after more years than it took Sky to break even) other than that they can grow losses and sales contemporaneously, which of course proves nothing and yet they have a market cap many times larger than Sky T.V.
Can anyone else see that this simply doesn't make sense. Oh wait, that's it, we're talking about world domination of the acconting software industry so there's unlimited upside, of course that explains it then.
Anyway that's my 2 cents. Invest against the tide of what the chart is telling you if you wish.

[Beagle]

i post what I believe mate, I don't short stocks. Some people have invested in this and posted on this stock with religious fervour and have forgotten that this stock was under $5 two years ago. Not much point posting anything else of this on my account, just read the chart, if people can't see which way this is headed after having a good look at the chart then good luck. I'm just some silly old fashioned accountant and my 32 years experience is probably worthless, I'm sure you young bucks know far better than I and this global domination stratagy will pay off handsomely. My 3 cents.
Just ignore the circa 90% drop in the Nasdaq when the bubble burst earlier this century, I am sure that was a once in a lifetime event..or is it a once in a generation event, you XRO shareholders decide for yourselves.

After all, what do silly old fashioned notions of fair price earnings ratio's really mean anyway...
(wanders off to have a drink and ponder how the investment world got so crazy...so soon, again, what does history tell us, nothing right ???).

[blackcap]

Getting smashed in Australia now... 31.60 last trade

[whatsup]

Getting smashed in Australia now... 31.60 last trade Approx $34 Kiwi and falling !

[winner69]

i post what I believe mate, I don't short stocks. Some people have forgotten that this stock was under $5 two years ago. Not much point posting anything else of this on my account, just read the chart, if people can't see which way this is headed after having a good look at the chart then good luck. I'm just some silly old fashioned accountant and my 32 years experience is probably worthless, I'm sure you young bucks know far better than I and this global domination stratagy will pay off handsomely. My 3 cents.
Just ignore the circa 90% drop in the Nasdaq when the bubble burst earlier this century, I am sure that was a once in a lifetime event..or is it a once in a generation event, you XRO shareholders decide for yourselves.

Oh Roger me old mate, don't get too despondent but love this I'm just some silly old fashioned accountant and my 32 years experience is probably worthless, I'm sure you young bucks know far better than I and this global domination stratagy will pay off handsomely.

I said almost the same exact words back at the turn of century

Almost makes me want to say now " I'm just some silly old fashioned retired accountant and my 44 years experience is probably worthless, I'm sure you young bucks know far better than I and this global domination strategy will pay off handsomely"

Disc: wasn't always an accountant but why ruin a good story

[Valuegrowth]

Lately Global investors are avoiding overvalued tech stocks. It is time to look for value stocks and it is also time to do some study on growth story of this company.

http://www.stuff.co.nz/business/industries/9913254/Xeros-share-price-slips

Xero's share price slips

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please note that I do not endorse or take responsibility for material in the above hyper-linked site. Please do your own research.

[couta1]

Hit my mental stop loss today but compare XRO to some others,XRO down 5.8%,Wyn down 6.4%,SLI down 7.7%, has anything changed fundermentally with any of these companies ?answer No, has anything changed in the forecast growth rates of any of these companies? answer No, so instead of selling this seems to me a time to baton down the hatches and ride out the storm IMHO

[couta1]

What has changed? The valuations the market is willing to pay for such companies. Welcome to the correction.
And we all know what comes after a correction,that would be an arrow pointing upwards :cool:

[couta1]

One of the best ways to destroy your own capital is to ignore self-set stop losses. You set them for a reason, right? So, if the story hasn't changed like you say, why ignore your prevailing strategy (which was to exit now)? I'm confused.
I'm not convinced that this downtrend is going to last at this point so not wanting to sell out for no reason,stop loss has only just been reached,if this was a XRO specific downtrend I would have sold but its not so I'm sitting the storm out a bit longer.

[couta1]

Another thing,although a different company SLI has gone from $2.90 a month or so ago to $2.03 today that's a 30% drop,do I believe that the price will be the same in 6 months time absolutely not,I'm sure it will be back up in the high $2 range so I apply this same thinking to XRO,now that may seem crazy to some but not to others

[couta1]

So the story has changed? How many billion is it worth this hour?? Sorry I forget.
That would be 4.54 billion,lots aye:cool:

[winner69]

......has anything changed fundermentally with any of these companies ?answer No, has anything changed in the forecast growth rates of any of these companies? answer No, so instead of selling this seems to me a time to baton down the hatches and ride out the storm IMHO

Think back about 6 months ago when XRO was $18 - has anything changed fundermentally with XRO ? answer No, has anything changed in the forecast growth rates for XRO? answer No

So why is XRO still in the mid 30's today when the story is the same .... people get too excited?

[Beagle]

Oh Roger me old mate, don't get too despondent but love this I'm just some silly old fashioned accountant and my 32 years experience is probably worthless, I'm sure you young bucks know far better than I and this global domination stratagy will pay off handsomely.

I said almost the same exact words back at the turn of century

Almost makes me want to say now " I'm just some silly old fashioned retired accountant and my 44 years experience is probably worthless, I'm sure you young bucks know far better than I and this global domination strategy will pay off handsomely"

Disc: wasn't always an accountant but why ruin a good story

Great story mate, history repeats not that you'd think some of the young bucks have ever heard that expression.
What's that old saying about trying to put an old head on young shoulders :)

When fundamental analysis is all but impossible and largly becomes little more than a spurious excercise in speculative extrapolation all you're left with is technical analysis and you ignore the charts and moving averages at your absolute peril. (If only I'd known this in the Bruce Judge and Ariadne days).

Its not just this company, some of the recent prices for listings in the States beggar belief.
Have we really as an investment community learnt nothing from the tech crash scarely little more than a single decade ago, surely not ? (shuffles off to find his quill pen and abacas and ponders the merits of another scotch).
Just because some big names put money in at $18 six months ago its suddenly worth double that right ? Are people really that gullible ?

[skid]

Think back about 6 months ago when XRO was $18 - has anything changed fundermentally with XRO ? answer No, has anything changed in the forecast growth rates for XRO? answer No

So why is XRO still in the mid 30's today when the story is the same .... people get too excited?

Spot On w69

If these (or other shares) are so great-then why has the outside market dragged them down...

So...maybe its time to start thinking about the outside market--When things start happening ''out there'' then these particular shares are really not the issue at this point--time to shift focus to the main event and forget about the side shows ATM.
If things settle,then you can go back to the side show.

At this stage you are basically betting on the ''main event'' (one way or the other)........IMO

[skid]

http://money.cnn.com/2014/04/06/investing/stock-market-lookahead/index.html

[Baa_Baa]

My concern for much of this discussion is that some seem vulnerable to losing the biggest profits they might ever experience in any market. Making money from stocks does not happen by watching the price every day, it comes from buying in, and selling out - at a profit.

I would like to see some more attention to these three indicators, all key in my view;

1. Lose the emotion. Easy said, hard to do, but critical to your success. There's is way too much emotion here. There is no place for emotion when you have a $10 slide in the share price, you should've taken a whole lot off the table by now, but it's not too late. Anyone who is 'long' has missed the point, IMHO.

2. There seems to be little attention here to technical analysis, where in the absence of any reasonable fundamentals, a simple look at the charts might have people preserving awesome profits by exiting at least some, if not all, of their holdings when the obvious support trendlines break down. Look at it like this, if you pulled the pin at say $40, and bought in now, you just banked $5 profit, or bought x% more stock - so why sit on your hands and watch it go off the cliff? (to save a $30 broker fee? Yeah -- Tui Ad)

3. XRO might be a colloquial stock, but this market like all markets doesn't give a flying fig about what you think personally .. it just does what markets do. So why ignore the fact that much bigger, humungously bigger markets are in play? XRO seems recently to be affected significantly by forces of the US stock markets, especially the NAS, or even more specifically, the Nasdaq 100 index, which seems a useful leading indicator for XRO performance (exceptt on Mondays ;) .. go figure.

Anyone wanting to enjoy their fabulous gains might consider taking them off the table at - the moment that share price breaks down below key support, - and keep a close eye on the Nas100 as an indicator of imminent weakness or strength.

JMHO, and disc .. XRO is still my best performing NZ stock ever, but I was out some time ago. I'd be happy to buy in again, and now you know what I'm looking at. Which, certainly isn't fundamentals or euphoria, or colloquial allegiance, or any other witch craft, just simple share price performance and influence of the market XRO wants so desperately to impress and grow.

Good trading, just try and figure out when to actually trade .. in .. and out.

BAA

[skid]

Another thing,although a different company SLI has gone from $2.90 a month or so ago to $2.03 today that's a 30% drop,do I believe that the price will be the same in 6 months time absolutely not,I'm sure it will be back up in the high $2 range so I apply this same thinking to XRO,now that may seem crazy to some but not to others

That may well depend on the outside markets Couts.
Perhaps a good approach would be to pay close attention to what the Dow does tonight and base your ''stop loss''actions on what happens--If it bounces -hold---If it continues to slide-sell------you can always buy back in

[couta1]

That may well depend on the outside markets Couts.
Perhaps a good approach would be to pay close attention to what the Dow does tonight and base your ''stop loss''actions on what happens--If it bounces -hold---If it continues to slide-sell------you can always buy back in
Cheers Skid

[couta1]

Forget about the Dow couta, it's the Nasdaq driving this for the most part, and specific sectors too. Keep a close eye on the "xro peer" companies I keep posting. That should give u a good idea of where we set heading tomorrow.
Cheers,Will see what the indices look like at 9a.m on the DB main page,as an aside I did a whole lot of reading over the weekend and there seems to be split camps on using stop losses versus riding out the storm in the absence of fundamental changes to a given company,seems there is no clear cut better choice looking at historical examples as both ways have given favorable outcomes,interesting

[zijiji]

My first post, but thought I'd contribute my thoughts on the recent results - and being from the UK I thought you may be interested in what is happening over here.

- XERO gained 127,000 new customers in the 12 months to 31 March 2014. This works out to an average of 348 per day.

- Since the "we've reached over 252,000 customers" announcement at the end of January 2014, this works out to be 32,000 new customers or 542 per day (assuming it was last day of Jan they reached this figure). So growth per month appears to be accelerating and I estimate think they will reach 500,000 customers by end of April next year.

I run a software company in the UK and have seen XERO uptake increasing with people moving from Sage Accounts and old style Excel spreadsheets. We don't have the Intuit market dominance in the UK that the US has. Accountants here are also pushing XERO and the recent KPMG deal will I'm sure see even more of the smaller accountants pushing it.

Overall, I think XERO has a great product, they appear to listen to what customer want, they regularly roll out changes (one of the benefits of cloud based software) and their API is really good and easy to integrate into websites - something that competitors products (for the UK market) cannot provide anything near as powerful or flexible for the price.

As an investor, the 9% drop yesterday was a bit worrying, but looking longer term I think XERO share price and market share will continue to increase :)

[apac]

My first post, but thought I'd contribute my thoughts on the recent results - and being from the UK I thought you may be interested in what is happening over here.

- XERO gained 127,000 new customers in the 12 months to 31 March 2014. This works out to an average of 348 per day.

- Since the "we've reached over 252,000 customers" announcement at the end of January 2014, this works out to be 32,000 new customers or 542 per day (assuming it was last day of Jan they reached this figure). So growth per month appears to be accelerating and I estimate think they will reach 500,000 customers by end of April next year.

I run a software company in the UK and have seen XERO uptake increasing with people moving from Sage Accounts and old style Excel spreadsheets. We don't have the Intuit market dominance in the UK that the US has. Accountants here are also pushing XERO and the recent KPMG deal will I'm sure see even more of the smaller accountants pushing it.

Overall, I think XERO has a great product, they appear to listen to what customer want, they regularly roll out changes (one of the benefits of cloud based software) and their API is really good and easy to integrate into websites - something that competitors products (for the UK market) cannot provide anything near as powerful or flexible for the price.

As an investor, the 9% drop yesterday was a bit worrying, but looking longer term I think XERO share price and market share will continue to increase :)

So assuming they reach 500k customers by this time next year, what do people think the fair price should be at that time? Less than what it is now ($35.60) or more than the peak of $45.99? or something in between? Any comments anyone?

[winner69]

So assuming they reach 500k customers by this time next year, what do people think the fair price should be at that time? Less than what it is now ($35.60) or more than the peak of $45.99? or something in between? Any comments anyone?

He'll ....if that the case growth would be less than this year ....bad because growth decay is not allowed

If so share price mid teens - just like that guy last week suggested was possible

[apac]

He'll ....if that the case growth would be less than this year ....bad because growth decay is not allowed

If so share price mid teens - just like that guy last week suggested was possible

So how many customers do we reckon they would need by this time next year for the share price to be more than the peak of $45.99?

[robbo24]

So how many customers do we reckon they would need by this time next year for the share price to be more than the peak of $45.99?

Enough to produce $450m annual revenues or 2.5m.

Nekk minnit.

[Shore]

Rod just mentioned a Canada specific version may launch next year.

[skid]

Forget about the Dow couta, it's the Nasdaq driving this for the most part, and specific sectors too. Keep a close eye on the "xro peer" companies I keep posting. That should give u a good idea of where we set heading tomorrow.

Your right Tumeric-I should have said Nasdaq--I stand corrected--Its down another 1%-IMO the smart money would exit these ''growth'' shares until the dust settles at which time they begin to ''grow''again rather than fall.

[skid]

Its a funny ole world--your shares can be doing well-hitting all the targets etc and the big bad mr market can still trash--Aint fair is it?

[couta1]

Your right Tumeric-I should have said Nasdaq--I stand corrected--Its down another 1%-IMO the smart money would exit these ''growth'' shares until the dust settles at which time they begin to ''grow''again rather than fall.
Yep saw that early morning,Skid they haven't stopped growing its just that the market has withdrawn the fertiliser:cool:

[couta1]

Interesting Intuits share price only down 10% as of today from its 52 week high,seems to be weathering the storm pretty well

[Toulouse - Luzern]

Here's a fun chart based on data published by xero.

5670


Thanks for the chart NewGuy.

Certainly interesting and worthy of consideration ...

XRO is a fast moving forum topic.

The XRO share price is certainly moving, noted that it is down along with many other IT companies since you posted, on the NZX, ASX, NASDAQ etc.

For me your chart is showing the classic; "the more you sell, the more you lose" effect, that I am sure Roger may also see.

And often unsustainable, unless as many others may have commented, something changes ...

and XRO are very professional, and good at what they do.

All E&OE and IMHO, so DYOR.

[skid]

Cheers,Will see what the indices look like at 9a.m on the DB main page,as an aside I did a whole lot of reading over the weekend and there seems to be split camps on using stop losses versus riding out the storm in the absence of fundamental changes to a given company,seems there is no clear cut better choice looking at historical examples as both ways have given favorable outcomes,interesting

I think the change is the outside markets ATM--They have as much to do with the SP as the company's health--Its very easy to get so wrapped up in the company itself that one forgets to take the other important factor into consideration--both are equally important.
The folks at Xero will continue to promote,develop,and hopefully increase sales on their product (theres nothing they can do about the outside markets) but we have a choice to hold or exit and enter at a better price.

[couta1]

I think the change is the outside markets ATM--They have as much to do with the SP as the company's health--Its very easy to get so wrapped up in the company itself that one forgets to take the other important factor into consideration--both are equally important.
The folks at Xero will continue to promote,develop,and hopefully increase sales on their product (theres nothing they can do about the outside markets) but we have a choice to hold or exit and enter at a better price.
Yep for sure Skid but if you exit for a 10k loss and re enter later mathematically it takes a whole lot longer to get back to zero than waiting for a share price rebound,tough kinda decision given macro forces are driving the downturn,cheers

[Bjauck]

Its a funny ole world--your shares can be doing well-hitting all the targets etc and the big bad mr market can still trash--Aint fair is it? The share market is like a shoal of fish. How your particular shareholding fares depends where it is in relation to the particular predator chasing the shoal at the time. The whole shoal, weak and strong reacts to a predator and if there are enough predators the majority of the fish will be gobbled up. However with only one predator going for the weak and vulnerable, the particular fish you are watching may survive and go on to prosper until eventually, who knows it may succumb to predators later on...apologies to Sir David!

[nextbigthing]

On target for another 5 pages of @#$% today I see. :)

[Bjauck]

On target for another 5 pages of @#$% today I see. :) That's life...you have to separate the valuable nuggets from the @#$%.

[Toasty]

Thanks, glad someone noticed. To me, this is the crux. Too many "believers" assume that greater customers numbers means greater profits. While intuitively appealing, that graph proves that the opposite is also possible. Where the cost-volume-profit relationship goes in future is anybody's guess!

Just been watching from the sidelines. My take on the graph is that Xero have hired a lot of very senior, very expensive people in a very short space of time. This should be having a very negative effect on the costs line for the moment. Theoretically this has to stop at some point as Xero nears the critical mass for the amount of people that they require. Staff costs should stabilise at some point as customer acquisition continues, hopefully sending that loss line upwards.

[skid]

Yep for sure Skid but if you exit for a 10k loss and re enter later mathematically it takes a whole lot longer to get back to zero than waiting for a share price rebound,tough kinda decision given macro forces are driving the downturn,cheers

I dont understand how exiting now for a 10K loss is worse than sitting on a 20K loss in 2 weeks time--You then have 20K to make up before breaking even (unless Im missing something)

As for the ''more you sell,the more you lose,TL,I think it may be ''the more others sell,the more you lose."

I guess one way of looking at it is by exiting you are not only saving any further losses,but betting on the bonus of getting a good share for a cheaper price(compliments of MR. Market)-----(you could do a PHD on the psychology of this sort of thing)

[skid]

If you have a bit of time on your hands -go back and skim through the DIL thread--WOW! (and there was a time when they were running neck to neck with XRO)---nothing is bullet proof.

[blackcap]

Yep for sure Skid but if you exit for a 10k loss and re enter later mathematically it takes a whole lot longer to get back to zero than waiting for a share price rebound,tough kinda decision given macro forces are driving the downturn,cheers

Couta1, I have said this before but you need to set up an exit strategy the moment you initiate a trade. And you must stick to it. There is no good changing this and adjusting the stop loss downwards as the stock price retreats. If you had set the stop loss at say $40 you would be happy now. Not at the time but then you would. What are you going to do if XRO continues to slide to $10? Don't think it is not possible, because it really is. There is no difference now fundamentally to when the stock was $18. I am not saying you should sell or buy but reiterating the importance of having a solid exit strategy. Not having one is a long term losing strategy.

[Banksie]

Thanks, glad someone noticed. To me, this is the crux. Too many "believers" assume that greater customers numbers means greater profits. While intuitively appealing, that graph proves that the opposite is also possible. Where the cost-volume-profit relationship goes in future is anybody's guess!

You need a split between fixed and variable costs for the graph to have any meaning in a cloud computing context. I don't follow Xero closely (and there are a lot of posts in this thread to wade through) but has anyone done an analysis of their fixed and variable cost split?

[blackcap]

You need a split between fixed and variable costs for the graph to have any meaning in a cloud computing context. I don't follow Xero closely (and there are a lost of posts in this thread to wade through) but has anyone done an analysis of their fixed and variable cost split?
Well their 700+ staff at (average $100k pa ?????) would already cost $70m pa

[Banksie]

Well their 700+ staff at (average $100k pa ?????) would already cost $70m pa

Some staff costs such as R&D, management team, marketing department, etc will be fixed while some staff costs e.g. customer support, will be variable.

[psychic]

Crikey, pre open looks sick. All bids down to $32 taken , next best offers 800@ $25 and 3000 @ $20, then the teens....

[Toasty]

And direct broking is down....(and now back again)

[psychic]

Too early for a drink I supppose

[Toasty]

Exciting. Pre opens always a bit of a mess but it looks like some big bids in at $32

[robbo24]

Crikey, pre open looks sick. All bids down to $32 taken , next best offers 800@ $25 and 3000 @ $20, then the teens....

In the XRO context there may be some good buying at some point, in amongst the burning theatre..

[LegendOfRiot]

This is very similar behaviour to the last big drop where it went from an intraday high of $40ish to $30 in a matter of days but then recovered shortly afterwards.

[couta1]

Panickers will panic,must be snow coming,good news for us skiers:cool:

[blackcap]

This is very similar behaviour to the last big drop where it went from ~$44 to $30 in a matter of days but then recovered shortly afterwards.

I do not think it has ever done this looking at the chart.

[couta1]

She's all going to custard folks,have a look at Wyn and SLI:scared: Oh and DiL and A2,run for the hills

[bull....]

yea all tech stocks are going down the toilet wait till see what happens when nasdaq actually has a big fall

[LegendOfRiot]

Down to $30 now.

[blackcap]

$29.50 now, and back to $30. Wonder where she will finish the day. If the Nasdaq has another bad day tomorrow no knowing where this will go.

[couta1]

Yeeeehawwww! Stairs up, elevator down. I'd definitely be staying out of this one for awhile!
Not just this one Moosie but many others,my portfolio had 20k wiped off it from last night to now,highlights the dangers of the share market compared to the more conservative investments I held just over a year ago

[tosspot]

I think the big boys linked to this stock will get involved soon but jeeze what a panic over reaction the nasdaq only dropped 1% and NZ stocks scramble 10+% crazy stuff the market

[LegendOfRiot]

I just wish I had the funds to buy more at these levels.

[couta1]

Don't worry mate I'm suffering too (I'm sure the vast majority of us are!). However, I don't see a change in the story of the companies I'm invested in so see no need to exit with said losses. The only thing that has changed is valuation methods. Back to basics it looks like!

Disc- not holding XRO. Yep as long as you've still got someone who loves you,a job,food and a roof over your head oh and a good sense of humour then were all good

[Shore]

Hoping that $30 is the floor. Would be a little unsettling if it crashed through and started heading down the 20's.

[Harvey Specter]

Yep as long as you've still got someone who loves you,Best I not tell her how much we have lost over the past few days then ;)

[Toasty]

35 minutes into the trading day and I feel like I've been dragged backwards through an industrial roller...

[couta1]

Best I not tell her how much we have lost over the past few day then ;)
I think my wife has become immune to the daily news of my losses,its the kids that are worried about the potential absence of their inheritances

[tzbang]

This is crazy. If it starts going down the 20's it's going to hit my stop and I'm going to be sick. I agree though, there is nothing wrong with Xero's progress. In fact, they've done everything excellently so far. So it would have to climb back once the global tech markets settle. I'm in the same boat as Couta.. it's temping to alter the stop to stay in for the upswing.

[Mista_Trix]

how long have we all been waiting for an opportunity to start buying in from a sell off.
Nothings changed just a shake out of the fearful.

All 6.5 million fearful...

[winner69]

New Guy - you need to understand this chart that Xero uses a lot in their presentations

The bigger the loss now the bigger the ultimate prixe

Wonder where they are on chart now?

[couta1]

All 6.5 million fearful...
Take a look at the whole market Mista Trix,Nothing unusual here

[Dentie]

If it breaks $30 ....next stop (or next pause?) ...$20!!

[Beagle]

Winner 69 I find it very interesting that they don't put any scale on that chart, either in terms of time or measurement of profit. As an accountant that likes to measure and define things this renders the chart completly useless to me.
Still, one must suppose that sort of detail is irrelevant to those that choose to truly believe.

[RTM]

Interesting graph....do they give any guideline as to the scale on the X axis ?


New Guy - you need to understand this chart that Xero uses a lot in their presentations

The bigger the loss now the bigger the ultimate prixe

Wonder where they are on chart now?

[Casino]

New Guy - you need to understand this chart that Xero uses a lot in their presentations

The bigger the loss now the bigger the ultimate prixe

Wonder where they are on chart now?

It seems a little bit that way but you are barking up the wrong tree. Costs will stabilise and you will see nice profits provided the margins stay the same. At the moment, SAAS margins are huge compared to Desktop software. Some incumbents have been longer in the game than Xero. You would think that margins will erode but it may or may not happen because the product is ultimately chosen by accountants and not just the client.

[winner69]

The words on the slide the Chairman talked to is below

All I saying believe the story and rewards will come .... the question is whether those rewards are worth $2 billion or $3billion or $4 billion or $5 billion now

Besides a public target of 1 million customers sometime I doubt even if Rod knows where this is heading

Roger - it is only a story at this point in time so they cant put numbers on the chart.

I would put 2 million customers and $500m profit as the end points

The Matrix mentioned in the heading is different from the Matrix shareholder

[couta1]

Have a great day everyone,I'm off to work in a lockup mental health facility for the afternoon,might check in for the week and by the time I come out I won't even remember the share market let alone individual company names,but then again some of the residents may have some useful market Tips to offer:scared:

[Balance]

Easy come, easy go - that's Xro's sp.

Relax and enjoy the ride but stop and get out if the heights are getting too heady.

[kerry]

Just throwing this out there for comment. It astounds me that so many analyse based on balance sheet in the case of Xero, although, I guess this is historically how it is done. This just could be my lack of experience. However, the reason I say this is, they are a growing new company as we all know and their competition have been around for years. I have installed accountancy software for over 20 years and understand accounting and IT and how far it has come in such a short time. In my mind, the analysis should be based around product comparisons. How many of you fully appreciate the differences between the two products? I remember going to the initial release of Xero. Being more of a systems person than the 'chartered accountants' around me, I fully appreciated what was on offer and sighed with relief that someone was finally answering questions I had had for years that no one had been able to answer. However, the old school accountants, who don't understand software and wouldn't survive running the day to day business of half their clients, weren't interested. Xero are only just getting started. I am sticking with them and cant wait to see them walk all over MYOB and Intuit.

[whatsup]

Off to the races (again ) but is the worst over ?

[Copper]

Off to the races (again ) but is the worst over ?

Looks a bit like the Aussies are not as scared as us....

[Beagle]

http://www.sharechat.co.nz/article/c66c6f54/xero-shares-drop-to-four-month-low-leading-growth-stocks-lower.html?utm_medium=email&utm_campaign=Xero+shares+drop+to+four-month+low+leading+growth-stocks+lower&utm_content=Xero+shares+drop+to+four-month+low+leading+growth-stocks+lower+CID_de15c0bba84da7088f89122246665cb6&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlec66c6f54xero-shares-drop-to-four-month-low-leading-growth-stocks-lowerhtml

What we are witnessing here is arguably the greatest battle between hope and stark reality ever played out on the NZX.
Will XRO ever be able to translate future sales growth into acceptable profits that justify its current market capitalisation let alone sufficient to reward investors who are currently able to exit at circa $30, (many with extremly handsome profits), for what appears to be a very long wait until those undefined and hoped for profits start to materialise at some undefined possible point in the future, when, nobody knows ? What I can say as an accountant is in my experience that clients generally strongly dislike changing their accounting programms so we will see how it plays out over time. Pretty safe to say i'm definitly in the sceptic's corner, some would call it the naughty corner LOL.

Reminds me of a story my great grandfather once told me about the gold rush days. The people selling the picks and shovels and equipment were the ones making the real money..which leaves me to ponder how much those top software development staff and management are being paid ?

[LegendOfRiot]

http://www.sharechat.co.nz/article/c66c6f54/xero-shares-drop-to-four-month-low-leading-growth-stocks-lower.html?utm_medium=email&utm_campaign=Xero+shares+drop+to+four-month+low+leading+growth-stocks+lower&utm_content=Xero+shares+drop+to+four-month+low+leading+growth-stocks+lower+CID_de15c0bba84da7088f89122246665cb6&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlec66c6f54xero-shares-drop-to-four-month-low-leading-growth-stocks-lowerhtml

What we are witnessing here is arguably the greatest battle between hope and stark reality ever played out on the NZX.
Will XRO ever be able to translate future sales growth into acceptable profits that justify its current market capitalisation let alone sufficient to reward investors who are currently able to exit at circa $30 for what appears to be a very long wait until those said profits start to materialise ? What I can say as an accountant is that clients generally strongly dislike changing their accounting programms so we wills ee how it plays out over time. Pretty safe to say i'm definitly in the sceptic's corner, some would call it the naughty corner LOL.

I completely agree with this. Evaluating a company based on a notion of future profits and when those profits might eventuate is completely logical.

What I fail to see is, why has changed from a few days ago? Was the market expecting profits to eventuate at a particular time and then suddenly it looks like it might take significantly longer?

[Xerof]

I completely agree with this. Evaluating a company based on a notion of future profits and when those profits might eventuate is completely logical.

What I fail to see is, why has changed from a few days ago? Was the market expecting profits to eventuate at a particular time and then suddenly it looks like it might take significantly longer?

Well, I guess if you pay attention to broker reports published in the media the past few days, and monitor whats happened to the Nasdaq recently, then you can put it all down to the sheeple following the sheeple. Unfortunately, thats the way the market works. I haven't bought XRO today, but I have bought another techie

[kerry]

http://techday.com/it-brief/news/xero-braces-itself-for-mind-blowing-2014-and-beyond/182176/?utm_source=wysija&utm_medium=email&utm_campaign=itbnewsletter

[blackcap]

http://techday.com/it-brief/news/xero-braces-itself-for-mind-blowing-2014-and-beyond/182176/?utm_source=wysija&utm_medium=email&utm_campaign=itbnewsletter

What is it you want to say with your link kerry?

[blackcap]

Don't get sucked in by the market/the story hasn't changed ;)

Cheers moosie. The same could be said when XRO was going from $18 to $40 in a hurry ;)

[robbo24]

Don't get sucked in by the market/the story hasn't changed ;)

If u ain't shorting it u ain't no doing it right.

If Roger and NewGuy ain't shorting it then they are just altruistic people trying to help out the little guy.

My guess is they are shorting it.

[tosspot]

http://techday.com/it-brief/news/xero-braces-itself-for-mind-blowing-2014-and-beyond/182176/?utm_source=wysija&utm_medium=email&utm_campaign=itbnewsletter
I think whoever wrote that letter is just a burnt investor in xero trying to get the crowd to stop selling. dont take this offensively anyone but I think xero is one of the only growth stocks getting smashed that deserves it. its coming back down to earth but still no where near where it should be. objectively

[BIRMANBOY]

I vaguely remember saying something along those lines about CNU.......But is the story a romance, maybe its a sci-fi thriller, is it a biography or a crime novel. Moosie maybe thinking its a National Geographic layout on migrating ruminants (or itinerant sharetraders). Does it have a happy or a surprise ending? Let the market do its thing...resistance is futile. I might even have a dabble myself since my trading a/c is officially up and running.
Don't get sucked in by the market/the story hasn't changed ;)

[Casino]

Au contraire mon ami, the story did change then, to the tune of $180M USD ;)

Drury just made an interesting point on twitter:

Getting calls about tech sell off. If already have cash ($210m), not necessarily a bad thing short term as harder for others to get funded

One could also say that strategic acquisitions that aid US customer growth may come cheaper.

[tzbang]

I love the quality opinion clashes on this thread. Beats a one sided cheer-fest that's for sure - so this is not a complaint at all. But it does surprises me how some want to 'warn of the bubble' repeatedly, over and over again to investors. I just don't understand the motive? There are other stock threads here which I have no belief in and I feel no incentive to try and warn them about it? Reading back through the thread I see these voices go very quiet when the stock is up and then very loud when it goes down. :-)

[Peitro]

...being greedy while others are fearful

Disc: Hold XRO

[Shore]

NewGuy and Roger

It's very easy to say that Xero is overvalued. You proclaim to know it with such certainty, so given that you clearly must have some understanding of the company, what would you say is fair value for the stock? Where, given Xero's balance sheet and growth rate, would you put it's market capitalization at?

[tzbang]

I'm amazed at the unwillingness of some people to accept that a business like this (which is nowhere near being profitable yet) might not succeed.

I don't think you'll find a single investor here who isn't aware that it's a high risk - high reward stock. I hold simply because I think they have a great product. My business uses it and it's better than anything we've seen before. It might have all the hallmarks of an imminent crash, but it also has all the hallmarks of becoming one of the most successful business enterprises New Zealand has ever produced.

[skid]

get some balls.
bought XRO for $31 this morning and WYN for 2.50.
I live for this sort of stuff.
A bit of fear in the market makes for a traders dream

Your buying just because it is cheaper than Fri,and if the market (nasdaq) bounces ,that will be a good decision Snaps--but it is much more logical to wait until you get a signal that that is happening--there may be more savings to come.
Once you see the nasdaq bounce then jump on--you may lose a few points on the way back up but it is much safer.
You are in a unique position to be able to see the US markets before the trading day starts here.
Never the less, hope things work for you.

[skid]

Don't get sucked in by the market/the story hasn't changed ;)


Is this the DIL thread??;);)

[Beagle]

Shore: Let's assume that xro bottoms out at a $100m loss this FY, which then improves by $50 million each year thereafter to reach annual profits of $1b by 2036. Further, let's assume that the approporiate WACC for such a highly risky stock is 15%. Using the assumptions, the market cap of the company (when valued on a strict DCF basis) is just over $1 billion.

Under far more bullish assumptions,. where losses bottom out at $100 million by then improve by $100 million each year, the DCF-based valuation for this company is still under $3 billion. IMO those are some pretty bullish assumptions, so its hard to see how the previous market cap of $5 billion could have ever been justified, hence my ranting and raving.

Your thoughts?

I was toying with doing the maths today along similar lines as yuo've articulated in that post but was going to use a required rate of return of 20% given the inherent high risks involved. Like you I am not shorting the stock but enjoy a good healthy debate and post sometimes in the hope that it might do some good for the investment community at large, its probably a waste of my time but I can't help myself from feeling a little alturistic at times just for the sake of having a frank debate if for no other reason.

In answer to someone's post on the last page I can't make the maths work on this stock to arrive at a current NPV that's anything like the current SP. I posted a link earlier today that showed two analysts have a sell recommendation on this stock and one a buy so although i am only a humble suburban accountant without access to the fancy computerised DCF modelling techniques the anlaysts use, they can't make the maths work either.

Obviously some big names thought it was worth $18 six months ago and just as obviously the chart looks absolutly terrible. Lacking any other meaningful and quantifable information I would suggest that perhaps $18 is where this stock might make some sort of sense ? Just as well we didn't see a full-on correction in the Nasdaq overnight in the U.S. otherwise we'd be in the 20's somewhere today.

[skid]

What Im seeing here, is that there are more who are afraid of missing out on a SP rise ,than those that dont want to get sucked into a greater loss (but thats just from where Im sitting--could be wrong.)

In some ways its worse when its a good company. Its just hard to know if its a $40 good company--or a $20 good company.......Or a good company that should be worth $40 but the market has beaten it down to a $20 good company.:confused:

[Copper]

Well that was a great day.Everyone had their say and half will be right and the other half wrong in the short term.It will all start again as the workers arrive home and look ,,and if they don't faint there will be another onslaught of comment.The chartists should make an attempt tomorrow to guide us all over again.There's been 70 or 80 posters and watchers all day on the thread so it's made the grade.I think Rod Drury was the happiest person with all his cash in the bank...

[couta1]

Well I'm back from my work at the psych unit but I'm not sure if the NZX can claim any more sanity than that unit today,funny how we often accuse the Americans as being over the top but I think today proves that Kiwis have less control of their emotions than the Americans,others commenting against XRO on here should open their eyes wider to the carnage covering the whole market today,I mean even Sum is down 2.6% just before what we expect to be a very good Q1 result,Snapiti you'll do well,good on you mate,I have fished Cook Straight for many years now so im well seasoned to ride this storm out:cool:

[winner69]

So $31 is a lot cheaper than the other day so a good buy.

For traders/speculators hope for a sudden recovery for quick profit

I get the feeling that many of the posters here a true believers, ie long term investors.

So $31 a better entry point than last week. However interested in what you believe/expect in the way of returns as an investor over say the next 5 years. Is the expectation of say a $100 share price then? Making XRO a $13 billion company

Genuine interest, assuming investors buying for a long term decent return.

[BIRMANBOY]

“One day Alice came to a fork in the road and saw a Cheshire cat in a tree. ‘Which road do I take?’ she asked. ‘Where do you want to go?’ was his response. ‘I don’t know,’ Alice answered. ‘Then,’ said the cat, ‘it doesn’t matter.”
― Lewis Carroll (https://www.goodreads.com/author/show/8164.Lewis_Carroll), Alice in Wonderland (https://www.goodreads.com/work/quotes/2933712)
What Im seeing here, is that there are more who are afraid of missing out on a SP rise ,than those that dont want to get sucked into a greater loss (but thats just from where Im sitting--could be wrong.)

In some ways its worse when its a good company. Its just hard to know if its a $40 good company--or a $20 good company.......Or a good company that should be worth $40 but the market has beaten it down to a $20 good company.:confused:

[couta1]

hope so...... and couta I thought the best buying today was SUM so I purchased more just above 3.40 as good quarter news announcement due out before the end of the week.
Good buying,Q1 result will be Wed or Thurs morn,hope you dont' sell your XRO on the first spike,wait and see how it goes,you never know:cool:

[Bilbo]

Nice, big, fat, juicy dead cat bounce coming up on this sucker as soon as the macro environment has a positive day. Congrats to those who bought near $30 (in anticipation of said bounce!) ;)

I agree a bounce is coming but don't agree with the "dead cat" bit :)

[Bilbo]

MA100 breached pretty solidly with a definite top @ $46. Going to be awhile before she gets back up there, but you'll be used to climbing mountains eh Mr Baggins? ;)

Yes I agree it could be a long climb back to the rarefied air of $46, however I believe that price was over the top and driven by the buying required on the back of the international index inclusions. Prior to that the price had seemed to stabilize in the high 30s and the fall from that level to current levels is something we saw happen late last year and not of too much concern to me as a long term holder. I expect a bit more volatility has been added by the additional overseas ownership now that XRO is seen as a global stock and included in appropriate indexes. Anyone know how far the mcap has to fall before there is a risk of it falling out of those indexes?

[Bjauck]

hope so...... and couta I thought the best buying today was SUM so I purchased more just above 3.40 as good quarter news announcement due out before the end of the week.

The tale of XRO, SUM and IFT could be shaping up as an adaption of the Tale of the Tortoise and Hare. (SUM being a Haretoise!). Over the long run IFT has been a good performer...it will be interesting to see if over as long a period XRO will have had the same level of performance, if it is indeed still around, assuming it has not become the Netscape of accounting programs.

Disc: SUM, IFT holder, but not in XRO

[robbo24]

MA100 breached pretty solidly with a definite top @ $46. Going to be awhile before she gets back up there, but you'll be used to climbing mountains eh Mr Baggins? ;)

Moosie, dare, I say, it's hammer time.

[Valuegrowth]

This was a market darling and why market players want to sell it so aggressively now?Is growth story intact? Do you think fundamentals are going to become weak in the long run? Are some market players are wary about cloud software?

http://www.stuff.co.nz/business/industries/9917599/Xero-shares-slip-from-favour
Xero shares slip from favourPlease note that I do not endorse or take responsibility for material in the above hyper-linked sites. Please do your own research.

[robbo24]

I am in agreement. Nice solid bounce off support @ $30 today. Better hope the Nasdaq doesnt sell off 15% tonight though! :p

I don't even care about the stinkin' NASDAQ - US dollars are weak against the all powerful NZD!

[Goldstein]

I am in agreement. Nice solid bounce off support @ $30 today. Better hope the Nasdaq doesnt sell off 15% tonight though! :p

The $30 support won't mean anything if the Nasdaq even goes down 1% overnight. It will be the fourth red trading day in a row. It seems a little odd to be taking a technical view of XRO when there are macro drivers at play here.

Disc: Thought about buying some XRO today, but it felt like gambling.

[robbo24]

The $30 support won't mean anything if the Nasdaq even goes down 1% overnight. It will be the fourth red trading day in a row. It seems a little odd to be taking a technical view of XRO when there are macro drivers at play here.

Disc: Thought about buying some XRO today, but it felt like gambling.

The Intuit chart is interesting... It looks like the XRO chart.

Although Intuit went ex dividend today...