Share Price Alert: Xero Ltd 5

I wasn't sure Id be back so soon but here I am gassing about Xero Ltd [XRO.NZX]which is at $16.70 today, almost 50% higher than its share prices since we last visited this share in March 21 and short of its all time high of $18.90 reached a week or so ago.

This is higher than the $1.12 price it was trading at back in July 2007  and way higher than its 2007 IPO price of a dollar.

What is the share trading at ridiculous prices like this then?

Well the reason is quite visible US buying, not by international standards but quite high in New Zealand for such a thinly traded stock. Most of the last $5, and more I suspect,  rise, can be put down to these insiders buying in the hope of making money off some fully news related stock - it has a mention at least a few times a week of something "hot" going on down at Xero headquarters and is undergoing a correction of sorts as we speak due to a few of these folk making enough moola.

It isnt massive buying though, almost 5 million or so most days - not yet hot.

Lets get this straight the rise in the share price has nothing at all to do with reality, the company has yet to make a profit, according to some it will be $200 million a year or more, but I have yet to be convinced that they will make a cent. These enterprises are highly speculative and the chance of them making a profit are close to zero.

The reason why the share price is so high, apart from a few Americans getting fatter, is speculation pure and simple and investors expect to see a profit, when it doesn't come the only way is down.

I value this share at $2.50.  


Xero Ltd @ Share Investor 

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Recommended Amazon Reading

Xero For Dummies (For Dummies (Business & Personal Finance)) by Heather Smith Buy new: $26.68 / Used from: $12.37 Usually ships in 24 hours

c Shareinvestor 2013

Share Price Alert: Xero Ltd 4

Xero Ltd [XRO.NZX] is a company that I just cant take my eyes off.  How long can it keep going up and up, like a well, like a rocket.

It traded down at $11.25 today after going past the 10 buck mark late last week..

It surpasses several of my current portfolio MFT - Mainfreight Ltd, WHS - Warehouse Group Ltd ,MHI - Michael Hill International Ltd ,  FRE - Freightways Ltd , BGR - Briscoe Group Ltd PPL ,- Pumpkin Patch Ltd and these all make handsome profits.

None of the aforementioned are even close except for the often mentioned  MFT - Mainfreight Ltd  is currently trading at around $11.25c , itself making a net profit of around $65 million to March 31 2013.

The depth of buying shows little wavering, with some people on a well known share site even picking $20 per share and another skilled player boasting of over 1000% returns - good on him, we like making money but we like people to keep it.

You know it is time to start selling when people start talking like this.

NO share, cash, investment is worth it if it hasn't yet made money and I will spell it out, Xero Ltd [XRO.NZX] has not made any M-O-N-E-Y and  is far from reporting one any time soon. In fact its many years away.

Furthermore its revenue to March 31 of an expected $38.6m, meaning Xero is currently trading at a multiple of 36 times forecast revenues.! 

Now I have spoken to CEO Rod Drury on one occasion and while is a very smart cookie, he cannot yet make 10 dollars into $1000 or make his company make money no matter how good it is.

That is a worry, just how good the company is. There must be another company around run by some background nerd just itching with his index finger on go button. 

Then it is all go into the next big thing.



Xero Ltd @ Share Investor 

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Discuss Xero @ Share Investor Forum
Download Xero Company Report
Listen to Rod Drury Interview



c Shareinvestor 2013

Share Price Alert: Xero Ltd 3

I know it can I think it can, that's the phrase Xero Ltd [XRO.NZX] holders have been using over the last couple of months as the share price has moved from mid 8s to the mid 10s. Still,  it has gone higher than I would have imagined, its trajectory really bizarre given that has yet to turn a profit or even getting close to it.

I suppose that I should really rate it based on the Australian experience - they tend to go overboard on stock prices too, but I really cant pick it. 

In absence of bad news it seems to be up from here.   

I suppose they would have to add 5 0r 6 bucks - those folks from the land of oz - because they have stocks based on nothing that are valued in similar multiples.

You will lose money if you buy this stock ... unless you are an insider. 


Xero Ltd @ Share Investor 

Xero: To those I haven't warned before
Do you still Love Xero?
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Xero Ltd: 2011 HY Loss looking promising
From Xero to Hero?
Stock of the Day: Xero Ltd
Rod Drury ready for the long-haul with Xero
Share Investor Interview: Xero's Rod Drury
Xero Ltd: Download full Company Analysis
Rod Drury on Xero and Growing Business
Xero set for surprise to the Market?
Love Xero? 
Share Investor's 2010 Stock Picks
Stock of the Week: Xero Ltd

Discuss Xero @ Share Investor Forum

Download Xero Company Report
Listen to Rod Drury Interview




c Shareinvestor 2013