Xro - xero

**Dentie** · 30-04-2013, 07:17 AM

Originally Posted by Toasty

I am counting on that being the first time that someone has said that to me without being sarcastic.

To be perfectly honest I really just bought into the whole story surrounding Xero and the fact that Rod has a solid track record with this sort of thing. I have met him and the thing that impressed me is that he has never doubted that he was going to be successful in any of his ventures. He is very focussed and is actually a nice guy in person. It is true though that he never misses an opportunity to get his view in. Which I support given that he is supporting his vision for his company. I don't believe though that there is any animosity here. He is simply playing the game as he sees it and everybody playing are big boys with resonably thick skin.

I panicked a bit in the early days but as the price came up I sold in small lots to get my initial investment back and get a bit of profit along the way and then a big bit recently at the mid $11's.

I just like the fact that it is a tangible offering (accounting software) and not too hard to understand, I don't get SNK at all for instance and it has a practicaly unlimited field to play in. SMEs, how big is this market.

I see it as incredibly risky especially as it seems to be driven by emotion and pretty much unmeasurable by any market standard but if a NASDAQ listing comes into play at some point who knows where it might go.

No wisdom here just a big chunk of luck to be fair. Hope that helps.

No, no sarcasm....just trying to learn.

I appreciate your honesty and agree with your sentiments - especially about it being an incredible risk. Nothing adds up for me here - hence why I asked.

Thanks again Toasty and best wishes.

**lastmoa** · 30-04-2013, 07:48 AM

Originally Posted by JohnnyTheHorse

Don't get too excited. Some of the talk on this thread is clearly bubble and irrational exuberance talk. This stock is way out of control. People are being blinded by the price increases and haven't stopped to look at the fundamentals. Take a look:

Revenue (Year ended March 2013: NZ$39 Mil
Market Cap: ~$1.65 Billion

Price/Sale Ratio = 42

What is wrong with a P/S of 42 you say? Everything. Although it's a bit chalk and cheese, DIL is sitting on a P/S of around 13. A high growth stock like Xero can have a P/S of up to around 20 before it starts getting considered outrageously priced.

At these prices, avoid this stock like the plague. You will get burned. When this bull market comes to an end (an it will), massively overpriced stocks like Xero are going to get hit very hard. And just because there's all this talk of money coming in from US investors doesn't mean it is smart money. Big institutions from the US get irraional during bull markets like this too...

Hi Johhny. Thanks for the info. Agree that at current prices I see DIL, which is more proven, as the cheaper of the two. Saying that, I will choose to be devils advocate of most people on this thread and say that Xero is potentially cheap at these prices IF Rob and his team continue to deliver on their (somewhat conservative)aim of having 1million customers. You can look purely at fundamentals but have to also view them trending-wise and also see the global story that is building. Sure it has big risk, as the incumbents will want to move solidly into this space, but from what I see his conservative aim has allowed for that somewhat. Just my two cents. I am not trying to sound like a bull on this stock but Xero's story so far has given me no reason to doubt the goal they will meet. Add to that a NASDAQ listing (it will come), global exposure, market cap in NZ$'s and appearing kinda cheap compared to other IT listings, and maybe, just maybe, this train is only just starting. If it's too risky for the average investor, simple .. stay away. Totally understand why people could think that. 8-)

CJ · 30-04-2013, 08:00 AM

Just putting it out there but my concern with a NASDAQ listing is it will value this at 20x annualised revenue - which is much higher than traditional stocks are valued at. XRO is well above this which is why I got out (some what depressingly in the high $7s)

**lastmoa** · 30-04-2013, 08:08 AM

Originally Posted by CJ

Just putting it out there but my concern with a NASDAQ listing is it will value this at 20x annualised revenue - which is much higher than traditional stocks are valued at. XRO is well above this which is why I got out (some what depressingly in the high $7s)

Define 'traditional.' This is not a conservative play like Coca-Cola or suchlike. Whenever Xero goes on the NASDAQ the fundamentals may not be 20x. Time will tell.

**Blendy** · 30-04-2013, 08:57 AM

Originally Posted by icekiwi

well, I feel a bit foolish having completely sold out at the 10.xx mark. Probably should have sold down in chunks.

You were not foolish - at that price, none of us here could justify the price so you sensibly cashed up and I bet you were totally delighted and amazed with that price! That it has gone higher still is still a mystery to me.

CJ · 30-04-2013, 09:01 AM

Originally Posted by dellow

Define 'traditional.' This is not a conservative play like Coca-Cola or suchlike. Whenever Xero goes on the NASDAQ the fundamentals may not be 20x. Time will tell.

That was my point. Over simplifying but Traditional companies trade on P/E ratios. High growth tech companies trade on P/R ratios. But even then, XRO P/R ratio is looking high.