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
Share Price Alert: Xero Ltd 4
Share Price Alert: Xero Ltd 3
Xero: To those I haven't warned before
Do you still Love Xero?
Share Price Alert: Xero Ltd 2
Share Price Alert:Xero Ltd
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
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
I see the share has taken an upwards trend today after being down somewhat, be prepared for more down days ahead..
ReplyDeleteI'd love to see definitive proof that it is Americans actually buying this share - and not just naive kiwi's who think things only go up.
ReplyDeleteThink you will find that it was those that know/use the companies products in USA that have been buying and are now selling...
ReplyDeleteThe companies shares finished down 14 c today after an initial plunge of more than $1.25, more evidence that this share is looking shaky...
ReplyDeleteI pick it to fall again tomorrow consolidate at about 13.50 14 dollars then head north again, there is life in this yet.
ReplyDeleteUp again today, nearly $18.10, think you will have to eat your words Rickard.
ReplyDelete