Xro - xero

[Lost in space]

Nice work with the stop. Its gone even lower in Australia (under NZD$33 now) so expect it to open even lower tomorrow. More stops will be hit??? Anyone who knows what they are talking about have a view on tomorrow?

Have a gut feeling it will touch $30 but thats all it is - a gut feeling. But I think today is healthy. It was coming thats for sure. It will settle XRO news will continue to arrive from the company itself and the price will tick up over time. Last November it was $4.75 odd. Look at the journey the company (not the share price) has had over 12 months. Consider where the company will be in November 2014 with the built up momentum.

[jmsnz]

I don't have shares in XRO and obviously wish that at some stage I had managed to connect the dots and buy a loss making company for much less than $30 or so.

I just can not see how it can be valued more than that list of companies Roger listed today. I can understand that it might be in the future, but right now? I don't have any real skills in share investing (clearly otherwise I would have XRO shares) but I am genuinely interested in how people get to a $30+ value for the company? How are you going to make a return on investment?

As a tax payer you would hope that the appropriate tax treatment is being applied to people buy/selling as surely they aren't buying for the dividend stream from the share?

[blobbles]

I note that accusations of it being a bubble are generally made by those I assume dont have shares. Oh dear.

Time will tell. Well, every share collapses at some stage and that will be the "proof" of bubbledom.... then when it recovers.....

Even today you can choose to focus on the reduction in shareprice by days end, or the fact that it reached a record high, take your pick.

And you could reverse that reasoning by saying:

"I note that denials of it being a bubble are generally made by those I assume hold shares. Oh dear."

[Copper]

I don't have shares in XRO and obviously wish that at some stage I had managed to connect the dots and buy a loss making company for much less than $30 or so.

I just can not see how it can be valued more than that list of companies Roger listed today. I can understand that it might be in the future, but right now? I don't have any real skills in share investing (clearly otherwise I would have XRO shares) but I am genuinely interested in how people get to a $30+ value for the company? How are you going to make a return on investment?

As a tax payer you would hope that the appropriate tax treatment is being applied to people buy/selling as surely they aren't buying for the dividend stream from the share?

I can only say that people who do not understand the share market stick to what they know.A farmer knows farming,an industrialist knows his industry ,an income investor sticks to the bank or whatever but this market at the present time has even the so called geniuses fooled.Sorry but one has to be blunt. Kind regards.....

[jmsnz]

I can only say that people who do not understand the share market stick to what they know.A farmer knows farming,an industrialist knows his industry ,an income investor sticks to the bank or whatever but this market at the present time has even the so called geniuses fooled.Sorry but one has to be blunt. Kind regards.....

So the premise is essentially that when I learn more about the share market I will understand the return I will get by paying $30+ for XRO today. Personally, I think I would be better trying to understand the value of the company itself, todya and in the nfuture, but obviously learning more about the way the market works can't be a hinderance either.

Still interested at how I calculate the value here?

[winner69]

A well developed spreadsheet using NPV in Excel for XRO, and based on the next 12 years of possible income the current MCap looks about right, but it depends on the depreciation rate (18% chosen).

http://www.nbr.co.nz/article/valuing-xero-–-1-hour-ts-146706

JMSNZ - Value? - have a look at what this guy did

[winner69]

In the scoop article where everyone's been talking about earlier this month, it mentioned: "The returns a venture capital (VC) investor want – 5-20x the investment that they make".

Does that mean potentially investors see Xero share price go up at least another 5 times? so over $100?

And if Scoop's scenario 3 and 4 predictions are correct, Xero could have over 1m customers in by FY16?

http://www.scoop.co.nz/stories/BU1310/S00170/xero-xronz-thoughts-on-valuation.htm

Personally, I think the $180m funding changes everything. Xero is no longer fully priced, and even scenario 4 value of $30.91 seem cheap.

jmsnz - value - that scoop link is worth looking at

Mark is a guru

[jmsnz]

Winner, that link just gives a 404 error - do you have the content somewhere?

Posts crossed found the Scoop one

[goldfish]

Haha what a day, i was going to sell when it hit 40(bought yesterday)but greed set in and i thought nah ill wait to see if we can get to 45. I had a weeks wages profit sitting there again then half a hour later it was gone, i didnt think it would recover today so sold and made enough for a burger and broker fees. So not a total loss. Good times.
Looking to get in again for a day trade or two when conditions are good.

[samshields]

Can finally breath! In at $19 out at $35.5 yesterday. Done my dash with Xero. Very best luck to all holders! Still great things to come.

[robbo24]

Can finally breath! In at $19 out at $35.5 yesterday. Done my dash with Xero. Very best luck to all holders! Still great things to come.

You understand the stock, why not trade it some more?

[Shore]

Twitter - making a loss to the tune of $130m debuts on NYSE to 75% premium valuing company over $31b. Likely to have a ripple effect on Xero today?

[goldfish]

Yes i have to agree i think we have seen the end of this run for now, maybe a small bounce sometime but i wont be looking to trade it. Would have liked to stag some twitter shares though. But hey who wouldnt

[CJ]

Twitter - making a loss to the tune of $130m debuts on NYSE to 75% premium valuing company over $31b. Likely to have a ripple effect on Xero today?XRO still more expensive on a P/R basis but it's XRO so sure, why not.

[Shore]

One would argue though that Xero's runway is considerably larger compared to Twitter whose growth is slowing up (and who still has to continue to find ways to monetize its product more effectively).

[Toasty]

$180 million dollars raised
Entrepreneur of the year
Cashflow up
CS First target price of $45.70

Maybe we need some bad news to drive the price up?

[PlatnuM195]

The market typically ignores good news at a time like this. Not that the situation's changed or anything.

[winner69]

Twitter - making a loss to the tune of $130m debuts on NYSE to 75% premium valuing company over $31b. Likely to have a ripple effect on Xero today?

Twitter a success ipo on the back of zero maybe

[PlatnuM195]

Ok so some off market trades this morning totalling $6,120,256 for 158,334 shares. Seems alright?

[Beagle]

So 6 1/2 years into their business nobody can reliably predict when they'll actually make a profit, let alone be cash flow positive.
I was chatting about this bizarre situation with an accountant friend of mine last evening and he reckoned there are circa 100 different accounting programms out there. Of course the Xero fans will claim there's is outrageously better. Now we have Twitter listing at circa 100 times its annual revenue which of course confounds tradtional investors such as myself who can see no logic to this bizarre situation.
As indicated yesterday all a seasoned investor can do is refer back to history, the dot com bubble / tech bubble being the most recent case studies but also the Goat and Deer boom and bust not to forget the Tulip bubble.

Naturally Xero enthusiasts will claim its different this time, it really is, this is game changing and ground breaking stuff, of course they would say that wouldn't they...its just that some of us have heard all the B.S. before and some havn't so they're happy to buy into the latest craze on the basis that it simply must be a good investment, look how fast its going up, you simply can't go wrong and its a licence to print money.

If its so good I am puzzled why not a single client of mine has asked about "upgrading" to Xero, maybe because I'm not ramming it down my clients necks like some other accountants are or just maybe they're happy with thier present system and have no idea why someone would want to fix something that's running perfectly well ? Still what would an old Dinosaur know...back to my cave to ponder the meaning of life...not to forget the mysteries of valuation methodologies. Quite obviously that A pass I got in Investment analysis at Auckland University in the late 1980's is completly useless now...

[Shore]

I'm holding tight. Story remains unchanged. Credit Suisse have target of $45, sales are ramping up (clearly obvious from latest OZ quarterly filing plus other noise coming out of Xero exec's) and they are really cranking out offices & staff in the USA. Simply got to ride this one out to find out where exactly our next high altitude base camp will be, and then from there we climb further up the mountain!

[gv1]

I was surprised why I received trade email when I didn't do any yesterday, found out that I did a trade request for xro at 29.4 in asx. When SP fell I forgot all about it. Now holding but very confident that its a great stock and price will rebound. Global stock.

[Shore]

... and I've said, usually these tech company re-evaluations are privately done behind closed doors through various capital raising rounds. Being a public company from day one has given us all an unprecedented vantage point at Xero's meteoric gains and dips as it has found its feet in the market. It's incredibly fascinating and I'm pretty sure one day they will write books about all this!

[goldfish]

Why would someone buy 100000 at 39 when its going to open at 32. Why pay a premium like that?

[TimmyTP]

Why would someone buy 100000 at 39 when its going to open at 32. Why pay a premium like that?
See here: http://www.sharetrader.co.nz/showthread.php?9339-day-opening-price

[goldfish]

Yea i understand the opening, i just dont know why someone would buy so many way above what its going to open at.

[gv1]

This one will rebound just like the other times but will go way higher...

[Lorne Ranger]

If its so good I am puzzled why not a single client of mine has asked about "upgrading" to Xero, maybe because I'm not ramming it down my clients necks like some other accountants are or just maybe they're happy with thier present system and have no idea why someone would want to fix something that's running perfectly well ? Still what would an old Dinosaur know...back to my cave to ponder the meaning of life...not to forget the mysteries of valuation methodologies. Quite obviously that A pass I got in Investment analysis at Auckland University in the late 1980's is completly useless now...

Why not email Credit Suisse and ask them? Let us know thier response.

[Nigel]

I'm holding tight. Story remains unchanged. Credit Suisse have target of $45, sales are ramping up (clearly obvious from latest OZ quarterly filing plus other noise coming out of Xero exec's) and they are really cranking out offices & staff in the USA. Simply got to ride this one out to find out where exactly our next high altitude base camp will be, and then from there we climb further up the mountain!

Not sure if this has been mentioned... but the guy on the Larry Williams' Newstalk ZB show earlier in the week (from First NZ Capital) said he thought that report was actually one that they had written (Credit Suisse is FNZC's sister company in Australia). He said it had a very broad range - from a value of $10 right up to about $81 from memory. So I wouldn't hold too fast to the $45 target. Just my 10c.

[gv1]

Milford says if it captures 10% of rivals customers, values SP as $70. And I for one total agree with that. Remember I was a sceptic of this stock initially.

[Balance]

Milford says if it captures 10% of rivals customers, values SP as $70. And I for one total agree with that. Remember I was a sceptic of this stock initially.

Let's hope Xero does so.

Good luck, Xero and best wishes.

It is not Xero's fault that punters suffer from irrational day to day exuberance.

[Minerbarejet]

Yea i understand the opening, i just dont know why someone would buy so many way above what its going to open at.the person involved thinks that the share price is going back to or better than its high say from 32.00 to 42.00. That is 10 dollars times 100000 =1,000,000. They are prepared to put 320,000 into get that amount back at 42.00. They are also prepared to put in 390,000 to get back 300,000 at 42.00. Or anywhere in between. Having the bid at 39.00 ensures they get first go at the lowest sellers. Take all the zeros off and you have the same thing 3.2 cents to 4.2 cents although liquidity enters into that.
Probably clear as mud but just trying to help
Cheers:)

[Toasty]

the person involved thinks that the share price is going back to or better than its high say from 32.00 to 42.00. That is 10 dollars times 100000 =1,000,000. They are prepared to put 320,000 into get that amount back at 42.00. They are also prepared to put in 390,000 to get back 300,000 at 42.00. Or anywhere in between. Having the bid at 39.00 ensures they get first go at the lowest sellers. Take all the zeros off and you have the same thing 3.2 cents to 4.2 cents although liquidity enters into that.
Probably clear as mud but just trying to help
Cheers:)

I think that captures it perfectly. This is personally why I don't trade in and out of the stock. Once the money is tangible in the account it makes it harder to recommit for what seems like a reduced return. I am a story believer and will stick to my piecemeal approach of taking a small amount every so often.

[Toasty]

Don't mean to sound rude, but you obviously don't understand the opening.... For one they certainly didn't buy "above" the open. They got in at $31. They put the high bid in to ensure they were first in line to buy at the open price.

I read this comment to mean the international trades that came in at 39 this morning. Given the carnage yesterday why would people be buying at those level?

[catchbag]

the person involved thinks that the share price is going back to or better than its high say from 32.00 to 42.00. That is 10 dollars times 100000 =1,000,000. They are prepared to put 320,000 into get that amount back at 42.00. They are also prepared to put in 390,000 to get back 300,000 at 42.00. Or anywhere in between. Having the bid at 39.00 ensures they get first go at the lowest sellers. Take all the zeros off and you have the same thing 3.2 cents to 4.2 cents although liquidity enters into that.
Probably clear as mud but just trying to help
Cheers:)

Exactly,and they are likely to be correct.

[Copper]

Looking like tracking the ten day MA.....Might see some consolidation after all the carnage.Wouldn't be a trader unless I had live quotes and lots of nouse.......

[catchbag]

So, any predictions for today? IMHO profit taking ensued,and then panic set in yesterday. Im expecting a bounce back today.

[Copper]

So, any predictions for today? IMHO profit taking ensued,and then panic set in yesterday. Im expecting a bounce back today.

May be quieter but on occasions the sellers have been far above ,so sellers may be a little scarce.Noon may be when Aussy kicks in.They could be an influence.(unless they all got stung as well)---

[Schrodinger]

Regarding placing high bids to get first in line.....

Isn't there a formula they use to stop this I.e. Opening price calculation and priority ranking when this is calculated?

If you could queue hop by placing an artificially high opening bid this would distort the market.

Anyone have an opinion on this? I noticed this on the GEO opening a few days back.

[catchbag]

Agree. It looked like ASX XRO was bouncing back towards the end lastnight. @$33 earlier in week, I would have (and did) buy. Can't see why that wouldnt be the case again today. I wouldnt be surprised if we see normal transmission resume, albeit slower for next week.

[goldfish]

Yes sorry i probably wasnt clear i did mean the off market trade of 102000 shares that passed through at 39. Not the match on opening. Cheers.

[Copper]

Regarding placing high bids to get first in line.....

Isn't there a formula they use to stop this I.e. Opening price calculation and priority ranking when this is calculated?

If you could queue hop by placing an artificially high opening bid this would distort the market.

Anyone have an opinion on this? I noticed this on the GEO opening a few days back.

The opening and end of trading day bids are all averaged.If you quote high to buy then you will know already what the average price is from the screen or your broker.If u want a few hundred shares you aren't going to affect the price by quoting high but are usually guaranteed to get your shares.As mentioned before by me the closing bids are averaged over I think 15 minutes to stop end of day jacking the share price.Hope this helps but the question has been answered many times before.....

[Lorne Ranger]

Seems like the day will depend on who blinks first. Im sure there is pent up demand, as proven last few days, including larger buyers. Same time they probably know that there's fear in the air now for this stock and they will be holding a while to see if they can get in cheaper, naturally. I think if it holds for the best part of the day then the buyer demand will start to regain momentum before close.

[Toasty]

I love this stuff article where they refer to the fact that its not all over for Xero. What does that mean? That the share price has caused Xero to go out of business. Meanwhile in the background Xero goes about executing its plan....

http://www.stuff.co.nz/business/industries/9378298/Xero-shares-retreat-from-high

[catchbag]

Up goe's ASX XRO 1.16

[Longhaul]

Methinks today has been a great buying opportunity - good on those of you who are taking advantage of it. (Pity I don't have spare piles of cash around!)

[gv1]

This one has lots of gas after lunch..

[blackcap]

Boom 35.80 and climbing. Gotta love the market gyrations.

[catchbag]

I pity those whom paniced yesterday, they won't feel any better this arvo Im picking.

[Lorne Ranger]

This one has lots of gas after lunch..

dont we all....

[bull....]

another 5 dollar range day cool

[Hawkeye]

dont we all....

Hahaha, nice comment.

Moving right along, thankfully the returning uptrend on the ASX kept going when it opened this morning

[Lost in space]

Funny how Roger et al tend to show up in force when the share price goes down aye, then completely absent now! I kinda find that a bit sad, particularly when people actually have money in this, yet it's those that don't that turn up on first sign of the price going down to tell every one how stupid they are for investing!

Anyway, glad to see the SP rebound. Trying not to be so glued to the depth at the moment. It's going to be a rocky road for a bit I suspect, a lot more ups, downs and Rogers to get through yet..;)

No doubt these same people would tell the investment fraternity that FB, Google, Salesforce, etc have all got it wrong as well.... Well if you predict rain long enough, one day there will be a shower and the catch cry will go up. Actually, on that note, I remember last year it lightly snowed in Orewa...

[Latama]

No doubt these same people would tell the investment fraternity that FB, Google, Salesforce, etc have all got it wrong as well.... Well if you predict rain long enough, one day there will be a shower and the catch cry will go up. Actually, on that note, I remember last year it lightly snowed in Orewa...

Can't forget the recent Twitter listing to add to the mix!

[Lost in space]

Funny how Roger et al tend to show up in force when the share price goes down aye, then completely absent now! I kinda find that a bit sad, particularly when people actually have money in this, yet it's those that don't that turn up on first sign of the price going down to tell every one how stupid they are for investing!

Anyway, glad to see the SP rebound. Trying not to be so glued to the depth at the moment. It's going to be a rocky road for a bit I suspect, a lot more ups, downs and Rogers to get through yet..;)

And all the parading around with accountant this and accountant that. Accountants in general are not the first (or second) persons/professionals you go to for business/investment advice.And I say that being a CA myself. My years of stock brokering have held me in far better stead.

As for accountants, as they say: : "Accounting is the profession for predicting tomorrow why the advice given yesterday didn't happen today".

[TimmyTP]

I don't know about any of this, but when making bold statements, be prepared for some a@#$ole to come back and quote you in 12 months - whichever side of the argument you are on!

[born2invest]

Investment-
- Based on reasoning and facts
- Safety of capital with reasonable return
- Independent thought
- Focuses on value
- Concerned with the underlying business
- Ignores market hype and what is popular "You cannot buy what is popular and do well over time"

Speculation-
- Based on emotions fear and greed
- Make quick & easy money
- Herd behaviour
- Focuses on price
- Concerned with the stock price
- Thrives on market hype, uses this to make money "The trend is your friend"

Based on the above, the amount of comments posted that fall into the "speculation" bullet points recently on Share Trader are increasing dramatically.

[Shore]

After all, it's just a bit of computer software for accountants.

And so was VisiCalc.

[Toasty]

And so was VisiCalc.

I wonder how much Excel has made for Microsoft? It would probably be a bit hard to work out as it is often bundled in office or preinstalled on PCs but I bet Microsoft have a value for it...

[Lost in space]

Investment-
- Based on reasoning and facts
- Safety of capital with reasonable return
- Independent thought
- Focuses on value
- Concerned with the underlying business
- Ignores market hype and what is popular "You cannot buy what is popular and do well over time"

Speculation-
- Based on emotions fear and greed
- Make quick & easy money
- Herd behaviour
- Focuses on price
- Concerned with the stock price
- Thrives on market hype, uses this to make money "The trend is your friend"

Based on the above, the amount of comments posted that fall into the "speculation" bullet points recently on Share Trader are increasing dramatically.


So ,based on the above criteria, relying on the reasons behind the RYM trend over the past number of years is "speculation"? The trend in a share price reflects numerous independent decisions made on the buy side and the sell side and very often that trend can be relied on for forecasting. When I was a stock broker investors/media would often ask me why a share went up. I would reply (rather cheekily) "because there are more buyers than sellers". Same in reverse. Its understanding why the trend is what it is thats the focal point.

[winner69]

So ,based on the above criteria, relying on the reasons behind the RYM trend over the past number of years is "speculation"? The trend in a share price reflects numerous independent decisions made on the buy side and the sell side and very often that trend can be relied on for forecasting. When I was a stock broker investors/media would often ask me why a share went up. I would reply (rather cheekily) "because there are more buyers than sellers". Same in reverse. Its understanding why the trend is what it is thats the focal point.

and when a shares goes down it is always 'profit taking' eh for want of any other explanation

[Beagle]

Funny how Roger et al tend to show up in force when the share price goes down aye, then completely absent now! I kinda find that a bit sad, particularly when people actually have money in this, yet it's those that don't that turn up on first sign of the price going down to tell every one how stupid they are for investing!

Anyway, glad to see the SP rebound. Trying not to be so glued to the depth at the moment. It's going to be a rocky road for a bit I suspect, a lot more ups, downs and Rogers to get through yet..;)
I've actually tried to get some work done today. Last time I checked you're allowed to express an opinion, positive, negative or objective. Some value all intelligent input and some take a more objectionable tone when it doesn't line up with thier way of thinking and can't handle rational objective debate, without playing the person not the issues, that's what's truly sad...

[blackcap]

Eureka... I have found a valid, company specific announcement for yesterdays sell off. nothing to do with fear, greed, hype, just pure old change in metrics :P... http://www.stuff.co.nz/technology/digital-living/30003078/wales-us-spying-harms-internet-freedom

[EyeSpy]

No doubt these same people would tell the investment fraternity that FB, Google, Salesforce, etc have all got it wrong as well.... Well if you predict rain long enough, one day there will be a shower and the catch cry will go up. Actually, on that note, I remember last year it lightly snowed in Orewa...

It's an interesting comparison with Google, anyway.

Google
Revenue $14893 million (USD)
Market Cap $336810 million (USD)
=>Market Cap 22.6x Revenue

Xero
Revenue ~$60 million (NZD)
Market Cap $4500 million (NZD)
=>Market Cap 75x Revenue

Hopefully I've got those numbers right. It's pretty rough and dirty, I know, but in the absence of a profit to compare with Google's $2970 million Net profit I thought it was worth looking at.

Xero has a lot of blue sky priced into it. It's a great product, but it's a long way from returning a profit and it's a tough market in the US. $60-odd million in revenue is not really an impressive figure. My own small business turns over about 1% of that, with a much better profit, and yet would sell for about 0.0009% of Xero's market value. Rather poorer growth prospects, mind you :).

I have no doubt there's money to be made in Xero shares at the moment, but it seems a risky business to me. Good luck to all holders.

[Snoopy]

Investment-
- Based on reasoning and facts
<snip>

Speculation-
- Based on emotions fear and greed
<snip>


I have been very curt with my editing above. However, I believe the underlying theme of 'investment good' and 'speculation bad' is behind this summary. I believe the situation is not as black and white as this. Some of my best investment decisions have been made without all the facts, because it is the uncertainty that gives the discounted entry price. Perhaps a hybrid of investment and speculation according to the above definition?

I don't think anyone could have anything but admiration with what Rod Drury has achieved with Xero. By that I mean seeking out powerful investors for new capital to keep him away from the cashflow funding brink. Of course being at the starting end of a global growth curve and managing to execute your business strategy as articulated helps.

By my definition the value of an investment is the present value of the sum of all future positive cashflows. Since Xero has no positive cashflows on the horizon it is by definition not an investment. Whether it is a good speculation is another question entirely. It may just be, but such things are not for me. What is clear is that Xero does not have enough cash to execute their global strategy. Also Xero has a track record of treating small investors poorly, diluting their existing holdings with large new issues of shares.

Don't put more into this than you can afford to lose fellow sharetraders.

SNOOPY

[Beagle]

I have been very curt with my editing above. However, I believe the underlying theme of 'investment good' and 'speculation bad' is behind this summary. I believe the situation is not as black and white as this. Some of my best investment decisions have been made without all the facts, because it is the uncertainty that gives the discounted entry price. Perhaps a hybrid of investment and speculation according to the above definition?

I don't think anyone could have anything but admiration with what Rod Drury has achieved with Xero. By that I mean seeking out powerful investors for new capital to keep him away from the cashflow funding brink. Of course being at the starting end of a global growth curve and managing to execute your business strategy as articulated helps.

By my definition the value of an investment is the present value of the sum of all future positive cashflows. Since Xero has no positive cashflows on the horizon it is by definition not an investment. Whether it is a good speculation is another question entirely. It may just be, but such things are not for me. What is clear is that Xero does not have enough cash to execute their global strategy. Also Xero has a track record of treating small investors poorly, diluting their existing holdings with large new issues of shares.Don't put more into this than you can afford to lose fellow sharetraders.

SNOOPY

Great post Snoopy. On CNBC last evening they were talking about the Twitter float and its price, which is trading on similar sales / price ratio's as Xero and losing money just as fast, albeit with little apparent idea of how to monetise their business model, (which perhaps makes it an even more expensive stock than XRO) !!

They way they explained it, (which could be something of an insight and partially explain XRO's price), was that Gen X & Y have an almost insatiable desire to be "connected" at all times. Research shows that 85% of these generations take their smart phones to bed with them !! I feel a bit better now knowing my kids wern't dissimilar to others.

I think that gives us older generation people an idea of why the "now" generations want information now and are absolutly desperate to stay connected, they don't want reports next week or next month, they're the "I must have it at my fingertips right now" generations and this perhaps explains some of the drivers behind XRO apparent popularity.

Whether XRO can eventually execute a global stratagy that finally translates into a highly profitable business model that warrants a market capitalisation that by definition must be substaintially higher than its present one as its a long way away in the future, remains to be seen for the reasons you've clearly articulated and the exceptionally high risks involved its not for me either.

Whatever investment stratagy one undertakes it has to be appropriate for your circumstanes. I think for example people in their fifties who are reasonably comfortable might be looking for more stable proven growth investments that will see them through to a very comfortable retirement whereas those in the their twenties or thirties can afford to have a more aggressive statagy knowing if they get a financial belting they've got plenty of time to start over.

[Snoopy]

So let's just be clear Snoopy, you are effectively saying that the likes of Peter Thiel, who have put money into companies such as Facebook and Xero have done so based on "emotions fear and greed" and investments (oops sorry "speculations") such these are "bad".

My point as always with respect to comments such as yours are that just because investments in Xero, Facebook, Twitter, Workday, NetSuite, Salesforce etc do not fit your own "investment" criteria, does not mean that they do not fit other's.


Just because the likes of Peter Thiel put money into Xero at $20, doesn't mean you should buy the same thing at $40. I also did not say that all speculation was bad as you implied. My main observation is that the little guy investor in Xero is not on equal opportunity terms with the big guy. IMO that is a bad thing.

SNOOPY

[MAC]

With scenario valuations ranging from $5.80 to $80 I would agree that XRO is one of the highest risk stocks on the NZX, that’s not to say though that it has not been a reasonable investment.

Clearly the returns shareholders have received thus far have balanced the risk endured, whether this continues to be the case perhaps only time will tell as the internal measures of risk for this company are dynamic, the rate of growth of sales, and perhaps more importantly, the rate of growth of gross margins.

If you are a long term investor then your best risk mitigation is diversification, I’ve recently adjusted my investment rules. Previously I had a rule such that I would not invest more than 10% of portfolio into a tech stock. However what I’ve learnt recently from DIL is that one of the greatest risks inherent to tech stocks does not arise from the company itself, it arises from the nature and behaviours of the type of investors that tech stocks attract. I’ve since lowered my diversification rule for tech stocks to 5%.

XRO is a perfectly reasonable long investment provided you actively acknowledge and monitor the risks, mitigate them by whatever means your investment strategy may dictate, and do have a conscious exit strategy.

[Snoopy]

First and foremost this is what I was referring to when you impying you were saying speculation is bad:

Snoopy wrote:
'investment good' and 'speculation bad'


You removed the context from what I said turmeric. That was my summary of a previous born2invest post, not my opinion.



So, that being said my point still stands, you are effectively saying that the likes of Peter Thiel, who have put money into companies such as Facebook and Xero have done so based on "emotions fear and greed". Is that not correct?


Peter Thiel sits on the board of facebook, so no doubt has the ability to steer the tiller on his investment in a way the small shareholder cannot. I don't know what percentage of Thiel's wealth is in Xero. If you could find out what percentage of Thiel's wealth was in Xero, then think about retaining that percentage of your own wealth into Xero. That could be a more balanced way forward for the informed speculator.

SNOOPY

[Snoopy]

By your criteria of what an "investment" is, what difference does it make in terms of the price you get when you invest in Xero?? I invested at $1.50, Thiel has invested several times, at $6, at $18 and on one other occasion I believe, and many Kiwis invested at $1, but that is irrelevant in terms of the statement you are making because at all times Xero would not have met your criteria of what an investment is, so I don't understand why you are even bringing that up??


When you get a company that apparently breaks all the investment 'rules' of valuation, I think that it is very important that there is transparency in what rules that remain. Uneven issuing of shares to preferred parties will ultimately dilute the returns of the less favoured shareholders.

One day the cashflow from Xero will turn positive, and from that point onwards the historical shareholder structure will determine the return for all shareholders.

SNOOPY

[winner69]

Not in bubble territory yet because I haven't heard of anyone mortgaging the house to buy ZRO shares yet

When that time comes then bubble territory .... extreme speculation snoopy ..... is upon us

Nobody here mortgaged their house yet have they

[blackcap]

there was that guy on the DIL thread who was going to sell all.... :) For those taking taxi's, are the taxi drivers starting to talk about stocks again? And at functions and family barbecues does the talk gravitate towards shares and "investing?"

[Casino]

!

XRO is a great example +3500% for many!

Yes, and therefore a lot of upside is already priced in that may never materialize. What is the upside that is not already reflected in the share price? Will Xero be a more profitable and bigger business than Intuit? Apple? Exxon?

I wouldn't bet on it given that growth in the US is sluggish in line with what Roger said:

http://www.forbes.com/sites/benkepes/2013/11/07/is-xero-looking-at-a-strategic-north-american-acquisition-to-speed-us-growth/

How long will 200 millions last if they need to acquire an (overpriced) tech company (potentially co-owned by Thiel ;)) to get traction in the US? Gaining market share in the US doesn't come cheap, especially if you are up against big profitable companies with long-standing relations to clients. Intuit has a P/E of 25 suggesting continuous growth. Yet that Xero will get a good chunk of Intuit's market seems to be a foregone conclusion judging by current market cap. This more than uncertain scenario is already anticipated. Is there any evidence suggesting that they will do better than optimists expect?

[baller18]

Everyone has their own valid points, and I agree a lot of "value" valuation techniques have gone out of the window for XRO. E.g EPS, cashflow and etc, etc.
Therefore, the risk for every individual is different due to their entry price.
Tummeric has a 3500% gain, whereas, someone else prob has a 100% gain or 50% gain.
The faster they rise, the harder they fall, so to say if a bad announcement was to come, their growth has declined, the person with the 100% gain, could prob be in negative territory, whereas, tummeric could still sell and make a 2000% gain or whatever...
Peter Lynch stated something on the lines of, "intelligent speculation is part of an investment strategy." Don't know how much weight he puts on it though. He was referring to the start of Amazon and etc...

[Casino]

Jeepers comparing them to Apple and Exon? Wow even the most optimistic are not doing that - you are keen ;)



Good, this is healthy. We need to spell it out for new gambling addicts that Xero will not increase another 35 times! Some optimists believe that Xero could be worth ~twice as much in 5 years. This is based on an analysis by First NZ Capital who used the store sign of Credit Suisse...

In 5 years, Xero will likely not be profitable and potentially be out of cash even if they don't have to shell out for new acquisitions. It comes down to how much cash you have to burn to grow in the US. I think Xero's annualized losses are ~40 million and rising. 200 million in the bank are great but that won't last forever and additional capital raising could be unavoidable. So any stake of the company that you buy now could be diluted. At the same time, Intuit has close to 1 billion US$ in annual net profit to fight back Xero. Your heart may be with the guy who has 200 million taking on somebody who has 5 billion but that's not necessary where your money should be.

[skid]

Not in bubble territory yet because I haven't heard of anyone mortgaging the house to buy ZRO shares yet

When that time comes then bubble territory .... extreme speculation snoopy ..... is upon us

Nobody here mortgaged their house yet have they

Beg Pardon?--Your saying people have to be mortgaging their house for it to qualify as a bubble?

[Casino]

Can you point me to where people have suggested XRO will grow a further 35 times? I personally have not seen anyone suggesting that.



Nobody has stated that. But I can tell from the forum that a lot of people are new to this game and we must let them know about top-end limits that their investment can reach.


Also you didn't clarify your point/suggestion regarding Xero acquiring a company. Can you elaborate on that please? Cheers.

I don't know of specific targets. If Xero was more transparent about customer growth in the US we would know whether they could do it organically. What is worse? An accountant software company that can't or doesn't want to tell us how many customers they have in the US?

[Casino]

Re the acquisition thing, you seemed to be suggesting a company related to Thiel earlier, that was the company I was asking about?



No that was just me trying to be mean. I just want to point out that Thiel doesn't necessarily have to believe in the profitability of this company to see opportunities for himself.




I think they are transparent enough re US customer numbers. From my accounts we seem to get 2 updates per year at least, usually more. Do you want them to update monthly or something?

I don't expect this from a proven company with a proven business model. But I think it would be appropriate for a company that is so hard to value. What is the problem with reporting customer numbers? Wouldn't it be great advertisement to let us know how more and more in the US are using it? Is real-time reporting technically too difficult? Maybe they could install Intuit to help them with the accounting?

[Casino]

or wave accounting, which is free.

https://www.waveapps.com/

[skid]

This is not the only tech co to go parabolic --Twitter up 73%!!--this is getting a bit to close to the pre dot com crash for comfort IMHO
For some this could be an opportunity to bank some tremendous profits.
For those that hold,then at least read up on that slice of history.
Good luck to all,but...be careful out there guys.

[Casino]

Am I missing something here?? They DO report customer numbers!!

only every 6 months. Despite being in the US for 2 years, they only had 16000 customers there, unless I'm mistaken. We need to know how many they have now to gauge how expensive it will be to get to 1000 000 customers.

[Casino]

OK mate, I see where this is going. Nice talking with you....

look - they have a great product. but so do other players and some of them have more muscle. you can't dismiss that when you encourage people to invest.

[Casino]

Seriously, email them and ask then if you are that keen to know, and let us know how you get on.

I've personally been very impressed with their quick responses to my questions along similar lines. Have had several prompt personal communications with Ross Jenkins. He is good at explaining what they report, why, and what they are hoping to do in the future. I have no reason to doubt if you email them you will get a response to your questions.

Here's his email. ross.jenkins@xero.com. Something tells me you won't email him though....

But for now, the customer numbers in the US are 16,600 (as of Oct 2013) growing at a rate of>140% YoY. But I'm not going to baby you through it anymore. If you really are interested in finding out info on the company there is a lot out there and there is always the phone, email, twitter or what ever if you want to know more.....

16600 is for the end of September for ROW including US. A lot has happened since then. I am not against Xero. But it is in everybody's interest that investors have reasonable expectations and that this company is reasonably valued.

[Beagle]

I guessing everyone already knows that accountant's generally get a percentage of the of the monthly software subscription price clients pay with these sort of systems. Bigger percentages for higher numbers of clients. The average client churn is apparently every 7 years so most people have a fairly close relationship with their accountant. In my opinion the established software players in the U.S. will be very keen to retain their professional networks and are well postioned to trump any kickback, (oh that's a dirty word isn't it), system Xero offers.
I suspect growth in the U.S. will be slower and more expensive than many are projecting. The stock appears to be priced on meeting very optimistic growth projections, (priced for perfection like Ryman ?), and for meaningful upside it would have to consistently blow those most optimistic projections out of the water in my opinion.

[blobbles]

Anyone linked to this article yet? http://www.sleeter.com/blog/2013/06/cloud-accounting-software-comparison-introduction/

While I don't like the comparison at the end to cars and smartphones, it is quite comprehensive and Xero + QB online come out on top (though I would say it gives Xero the edge).

[skid]

That depends on what the reason is--Do you believe that that kind of rise in that period of time is because everyone believes they are executing to perfection(with no hype involved)
Could there have been a meager 10-20% rise because they were executing to perfection(,minus the hype)
In my opinion there has been a few instances of some pretty hefty ''leaps of faith'' recently in more than one sharemarket.
RYM is a very different scenario--check out the chart --Its basically steady growth,no parabolic jumps.They kept delivering and the share price rise reflects this.

Its much harder to apply logic to XROs chart in the last 4 weeks. Just exactly what was it that caused the stampede up?
The company may be good --or great--or it could have more to do with whats going on inside peoples head than the company itself.
Maybe it will double from here pretty soon,but statistically until some real good sales figures come in,the odds are getting tougher.

[Snoopy]

Snoopy as per your post, Wiki has Thiel's net worth at $1.6b as at March 2013. He currently has roughly $250m in XRO according to the last SHH. Roughly 15% of his net worth on those figures, but let's make that 10% to be a bit more conservative. A pretty sizable investment don't you think??


Right, given even Thiel probably didn't expect his investment in Xero at $18 to double in a month we can assume that one month ago when Thiel signed over the money he saw Xero as 5% of his total worth. I would be fairly comfortable with that as an informed speculation. It is certainly not chicken feed even by Theil's standards, but neither will Theil lose the farm if it all goes bad. I wonder how many investors here though have Xero as no more than 5% (or 10% with a months hindsight) of their investment portfolio?

SNOOPY

[Beagle]

Interesting comments Roger.

One thing that springs to mind re the pricing to perfection comment (and I'm not saying either are) but stocks which price in a lot of future don't do so without a reason. Maybe with RYM and XRO it's happening because they are executing to perfection?? Now of course neither company is perfect, but what I am saying is surely credit where credit is due applies here to some extent??

Ryman have earned investors respect based on an enviable track record of profit growth and probably deserve to be priced where they are because people can say with confidence that they have executed to perfection, whereas in XRO's case what we have are essentially early encouraging signs and people appear to be automatically assumming that they will execute to perfection in the U.S.
I think both companies will find that just because something works well in their home market, doesn't automatically mean it will work well in other markets. The difference is that while it will hurt Ryman if execution is too hard in Australia, they're just dipping their toe in the water at the moment ($30 estimated cost for Wheelers Hill failure which is nothing for a company of this size), if XRO don't execute well in the U.S. with what basically amounts to an all or nothing expansion stratagy, well...I'm sure I don't have to spell it out. I would have thought if someone has a ten bagger + they'd be out buying a new supercharged Jaguar, or something similar for some summer fun. You can't take it with you last time I checked :)

[Casino]

Bain Capital bought MYOB for ~1.3 billion when revenue of MYOB was ~200 million. Corresponds to ~6 times their revenue; ~11 times of their operating profit.

http://www.reuters.com/article/2011/08/21/us-bain-myob-idUSTRE77K0BD20110821

Xero makes losses. If they hit their target of 1 million customers, which is uncertain, they will have revenues of ~350 million. At that level, a valuation of 2-3 billion seems fair. That's half of where we are now and assumes that we hit 1 million. Based on that, I would say that there is more room to the bottom than to the top. Locking in profits/cutting losses could make sense.

[Beagle]

^^ Those multiplles make sense mate. I think the other thing that people who arn't familiar with accounting programms need to know is that all cloud based subscription services appear to be targeting mainly small business operators, (they don't really appear to offer a full functionality accounting system for larger business operators) and many small business owners are very cost conscious. You can buy a good accounting system like quick books for a one off fee of a couple of hundred bucks, is it realy worth paying $90 bucks every month plus GST indefintly ? Is your data absolutly safe and incapable of being hacked on someone else's server ? What happens if we have a significant outage in internet functionailty ?
Small business operators are well capable of executing desktop based systems on their mobile laptops and e.mailing invoices, credit notes, quotes e.t.c. or take a portable printer and prtint them out for the customer...none of this is rocket science. I guess its safe to call me a sceptic, especially at 35 bucks !!
In case anyone is wondering its really hard to design software to encompass all the specific nuances of an overseas trading jurisdiction including their specific taxation and trading characteristics and all existing business's will already have a system they're presently using. It took the Australian based MYOB for example, many years to adapt their system to N.Z. tax and GST requirements properly. For years it ran like a pig and they lost plenty of customers because of it...I have had a dislike for it ever since due to the massive early problems.

[janner]

Half a pound of tuppenny rice, Half a pound of treacle. That’s the way the money goes. Pop! goes the weasel.

IMHO..

[oldmate]

^^ Those multiplles make sense mate. I think the other thing that people who arn't familiar with accounting programms need to know is that all cloud based subscription services appear to be targeting mainly small business operators, (they don't really appear to offer a full functionality accounting system for larger business operators) Roger you cant be everything to everyone, they acknowledge that they target small business there are other accounting software that is more suitable than Xero not sure of what point you are wanting to make.

and many small business owners are very cost conscious. Yes they are but this package save you a bucket load of time I have POS Software Vend intergrating with Xero and it saves me a lot of time. Business owners are also able to do themselves without a bookkeeper/Accountant so Xero can help business owners who are cost conscious

You can buy a good accounting system like quick books for a one off fee of a couple of hundred bucks, is it realy worth paying $90 bucks every month plus GST indefintly ? Roger I got a fair history in accounting packages and there aint many good ones for a few hundred bucks. The world is moving to real time accounting.


Is your data absolutly safe and incapable of being hacked on someone else's server ? Who knows they tell us it is.

What happens if we have a significant outage in internet functionailty ? We are screwed
Small business operators are well capable of executing desktop based systems on their mobile laptops and e.mailing invoices, credit notes, quotes e.t.c. or take a portable printer and prtint them out for the customer...none of this is rocket science. I guess its safe to call me a sceptic, I endorse this comment.especially at 35 bucks !!

In case anyone is wondering its really hard to design software to encompass all the specific nuances of an overseas trading jurisdiction including their specific taxation and trading characteristics and all existing business's will already have a system they're presently using. I would pass on your tips to the Xero software developers so they dont make the same mistakes as MYOB , good pickup



It took the Australian based MYOB for example, many years to adapt their system to N.Z. tax and GST requirements properly. For years it ran like a pig and they lost plenty of customers because of it...I have had a dislike for it ever since due to the massive early problems.


I think this forum is great to have adiverse group of opinions

[janner]

" The world is moving to real time accounting. ".

No !!.. The World is waking up to the fact that Accounting is ripping them off..

[oldmate]

" The world is moving to real time accounting. ".

No !!.. The World is waking up to the fact that Accounting is ripping them off..

in what way , by trying to make profit

[winner69]

I think this a buy recommendation ..... all NZers should enjoy the ride

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11154463

OMG .... Bernard finally getting it .... his mate Andrew must be a good coach

[skid]

Skid, I've mentioned many things along the way that I believe can be attributed to XRO's SP rise, executing to plan is but one of these.
My post was in response to Roger (who brought RYM into the conversation). I believe one thing XRO and RYM have in common is a great management team that have executed their respective business models perfectly. Their SPs are likely to be reflecting this to some extent on would have to imagine.

Tumeriic-
Im not disagreeing with with your observation that This share has a great management team.But I feel thats where the comparison with Ryman stops.
.
RYM has a long track record and actual ''brick and mortar'' Assets.
XROs share price is reflecting the way people are perceiving this company.
Im just simply asking where the value stops and the hype begins(why has it doubled in 4 weeks)
IMO we are in a very speculative point of time in the share market.
Why not sell enough to free carry your shares?
All Im saying is when things get like this,its good to stand back and do some analysis.
Its the ''to some extent'' and ''one would have to imagine'' that Im questioning
You and alot of other holders are in an enviable position right now(beyond the expectations of the owner most likely)
Its where you go from here that counts

[Stranger_Danger]

I think this a buy recommendation ..... all NZers should enjoy the ride

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11154463

OMG .... Bernard finally getting it .... his mate Andrew must be a good coach

So Bernard sells his Auckland house because he regards Auckland house prices as overvalued?...

..... and Xero is the undervalued, makes more sense, alternative?!?

[Dentie]

" The world is moving to real time accounting. ".

No !!.. The World is waking up to the fact that Accounting is ripping them off..

How many SME's are there out there who have moved to Xero (& their ongoing monthly fees - which is fine, if they perceive value) and who has experienced their Accountants' annual fees dropping to reflect the massive drop in their time to produce financial statements etc?

[Dentie]

Tumeriic-
Im not disagreeing with with your observation that This share has a great management team.But I feel thats where the comparison with Ryman stops.
.
RYM has a long track record and actual ''brick and mortar'' Assets.
XROs share price is reflecting the way people are perceiving this company.
Im just simply asking where the value stops and the hype begins(why has it doubled in 4 weeks)
IMO we are in a very speculative point of time in the share market.
Why not sell enough to free carry your shares?
All Im saying is when things get like this,its good to stand back and do some analysis.
Its the ''to some extent'' and ''one would have to imagine'' that Im questioning
You and alot of other holders are in an enviable position right now(beyond the expectations of the owner most likely)
Its where you go from here that counts

Now come on Skid, who considers it appropriate to use bricks and mortar and long track (NPAT) records these days when valuing companies ... it is now all done using fresh air ... or is that "cloud based" assets?

[Casino]

I understand why smokers laugh off health warnings. You die only once and then there is no real learning period. I totally get that. But you don't have to be old to have seen and been affected by how easily value can be wiped off the market. Good on the Herald for spurring this!

Bernard Hickey:'The capital raising announcement set out their ambition - to take on and beat US giant Intuit in the contest for 29 million customers. No New Zealand company has had a real shot at dominating a part of a global market before.'

beat US giant Intuit
Intuit owns the key US market. It has a market cap of ~20 billion. Xero is competitively placed to win a share of new and small businesses, not all businesses. Xero is currently valued at ~4 billion.

contest for 29 million customers
Xero says they are aiming for 1 million customers. The share price values the company as if they had already 2 million. Would people start using Big Macs as medication if McDonalds said they were healthy?

No New Zealand company
There are enough non-NZ competitors.

a real shot
It's just that, a shot, not a foregone conclusion. 16600 customers are the first 500m of a marathon.

a part of a global market
how much is this part of a global market worth?

[blackcap]

Just a word of warning for the potential shorters of XRO and others out there.....
Excerpt taken from "Market Wizards" circa 2011


Are there mistakes you learned from as a trader?
As an equity trader, I learned the short-selling lessons relatively early. There is no high for a concept stock. It is always better to be long before
they have already moved a lot than to try to figure out where to go short.

What are examples of concept stocks?
The Internet stocks in the 1990s and biotech stocks in the late 1990s to early 2000s.

How about a current example?
The cloud computing companies. When P/E multiples get to 50, 60, or 70, you are in the realm of concept stocks.

[Casino]

Just a word of warning for the potential shorters of XRO and others out there.....
Excerpt taken from "Market Wizards" circa 2011




The answer to gambling isn't gambling. The casino always wins. Having said that, the odds of gambling at the casino might be better than buying Xero now. According to First NZ, in their super bullish blue sky scenario, you have a 10% chance that Xero will be worth $75 in 2020. Compare that to a 50% chance of getting a similar return in one night by putting it all on red...

http://www.nbr.co.nz/article/xero-can-win-ck-148433

[artemis]

Long article by Chris Keall in the NBR = Xero Can Win. Temporarily freely available but I think will be back behind the paywall tomorrow.

To summarise his views-

Xero will win in the software market? - I think it’s likely.

Can Xero win on the stock market? - I have no freaking idea.



http://www.nbr.co.nz/article/xero-can-win-ck-148433

[Casino]

That is not what the reports say's casino. Is this your interpretation of the report or the NBR article?? Either way both are wrong as far as I read it anyway. What they are attributing is probabilities to their 12 month target price, aren't they? Therefore they attribute a 10% chance XRO will be worth $77.85 in 12 months. Correct me if I'm wrong, I often am ;)

That is not what the reports say's casino. Is this your interpretation of the report or the NBR article?? Either way both are wrong as far as I read it anyway. What they are attributing is probabilities to their 12 month target price, aren't they? Therefore they attribute a 10% chance XRO will be worth $77.85 in 12 months. Correct me if I'm wrong, I often am ;)

You may be right - the article isn't very clear and I might be wrong. But let's assume astronomic growth to 7 million customers in the US by 2020 and ask ourselves what its fair value will be then. Will it still have the same growth prospects and can it be worth many multiples of what it is worth now? If everything goes better than perfect (7 million customers), will they be worth more than 10 billion in 2020?

How realistic are 7 million users?

Mint.com, which is for personal finance and now owned by Intuit has 10 million users. A really neat way for Americans to have all their accounts, credit cards, 401k, etc. in one place. The service is free and there are arguably more Americans than American businesses. I wouldn't be surprised if Intuit would add accounting and invoicing functionality to mint.com.

Anyway, Quickbooks online (Intuit) has ~450000 customers. Interestingly, we don't know how many of them are on a free trial. Likewise, we don't know how many of freshbooks' alleged 5 million users are paying members. Isn't it funny when bean counters can't tell you that? Does that not raise a red flag with you? Clearly, not everybody is flocking to the cloud and Americans aren't flocking to Xero.

Drury has not commented on 2015 revenue, when Xero could make a profit, or whether it will list on the Nasdaq – beyond acknowledging that is one of the options on the table.

These are nuggets of information that I would like to have in exchange for >4 billion dollars and expect to be able to get from a bean counter. Never trust a skinny cook!

[Casino]

No, what is REALLY funny is that Intuit spends $1.2 BILLION A YEAR on sales and marketing, and another $685 MILLION A YEAR on R&D. Xero raised $150 million - well, that should last them about 4 weeks in the US market :eek2:

Yes that would worry me a lot because they have a healthy profit and can keep doing that. And that's probably also the reason why Quickbooks online has >400 000 clients vs 16000. It's David vs Goliath. It's trademe vs ebay. It's just that you are paying ebay prices for trademe.

[winner69]

That NBR story has a lot of loose reporting

Like the probabilities on the scenarios they tout from FCNZ only total 75% - is the 35% missing the going broke scenario and total wipeout

[winner69]

Ah - there are three other scenarios not reported .... but must average out about the 45 buck range eh

[blackcap]

I wouldnt put too much faith in First NZ Capitals analysis. I remember when they (NZ's subsidiary of Credit Suisse) rated TEL as a buy with a price of $10+. In fact they were the only broker if memory serves correct that purchased TEL at exactly $10 (high point) for the stock to decline from there over the next decade.....

[winner69]

Yup, a weighted average. They attribute a 10% chance to "fail"


Scenario is "US fail" only ..... and still having 1.5 million customers .... certainly not failure

Is there anything worse than this?

[Casino]

Scenario is "US fail" only ..... and still having 1.5 million customers .... certainly not failure

Is there anything worse than this?


It looks like accountants are more imaginative/creative than analysts.

[Copper]

Despite all the posts can anyone say that in two months time that their scenario will be accurate.I would say that we haven't the foggiest clue .The recent posts all cover the points raised at 10 bucks,at 20, at 30 and still we are guessing what may happen.If you don't like he figures ,get out ,and if you like, stay in.... Simple as that ..

[Casino]

Despite all the posts can anyone say that in two months time that their scenario will be accurate.I would say that we haven't the foggiest clue .The recent posts all cover the points raised at 10 bucks,at 20, at 30 and still we are guessing what may happen.If you don't like he figures ,get out ,and if you like, stay in.... Simple as that ..

Compelling argument to have 'Yeah let's ride this :cool:' as the only content on this forum. Are we back to the days when you weren't allowed to ask a company how they are going to make money?

[Longhaul]

Some interesting user feedback (http://blog.qbo.intuit.com/2013/10/30/the-new-quickbooks-online-why-design-matters/) about Intuit's Quickbooks Online cloud product. The existing user base sound like they tolerate using QBO or really don't like it.

Compare that to users of Xero who generally rave about it (recent blog post about a Xero update (http://blog.xero.com/2013/10/attach-files-financial-data/#comments)). Make of it what you will.

Disc. hold XRO.

[Casino]

I was always told at Uni that accounting was an art not a science.

I see why you would want to hire a cunning accountant but not why you would invest in one.

[apac]

so any guesses as to what price it will be open and close tomorrow?
My guess open around $36, close around $38, may break $40 again tomorrow.

[Casino]

Some interesting user feedback (http://blog.qbo.intuit.com/2013/10/30/the-new-quickbooks-online-why-design-matters/) about Intuit's Quickbooks Online cloud product. The existing user base sound like they tolerate using QBO or really don't like it.

Compare that to users of Xero who generally rave about it (recent blog post about a Xero update (http://blog.xero.com/2013/10/attach-files-financial-data/#comments)). Make of it what you will.

Disc. hold XRO.

It is obvious from those comments that they have a good product and that they can invoke religious-like brain reactions similar to Apple products. There is a serious risk that you will jeopardise euphoria for the product if accountants who buy at this level loose their investment.

[apac]

The answer to gambling isn't gambling. The casino always wins. Having said that, the odds of gambling at the casino might be better than buying Xero now. According to First NZ, in their super bullish blue sky scenario, you have a 10% chance that Xero will be worth $75 in 2020. Compare that to a 50% chance of getting a similar return in one night by putting it all on red...

http://www.nbr.co.nz/article/xero-can-win-ck-148433

Assuming NZ capital's probability predictions are correct, and that is a big assumption, then the odds are a lot better than gambling. There's a 65% chance that the shares are worth more than the current price.

I think in the short term, SP will still go up to who knows how much. So in the short term, I think it's still a good trading stock, the range for a day can be $5+, and with good volume, so if you buy 1000 shares, you can make (or lose) thousands in a day.

I wouldn't be surprised if SP gets pushed to $50+ by the end of the year.

[blobbles]

Some interesting user feedback (http://blog.qbo.intuit.com/2013/10/30/the-new-quickbooks-online-why-design-matters/) about Intuit's Quickbooks Online cloud product. The existing user base sound like they tolerate using QBO or really don't like it.

Compare that to users of Xero who generally rave about it (recent blog post about a Xero update (http://blog.xero.com/2013/10/attach-files-financial-data/#comments)). Make of it what you will.

Disc. hold XRO.

Holy moly... just reading the customer feedback for QB. Wow. Maybe this is why Xero's SP has gone ballistic. It sounds like the competition can barely keep their servers up and running and possibly the only reason it has become so popular is they haven't had the choice?

[apac]

Is there a tiny chance xro wins 10, 20, 30 or more percent of US market? Is it possible XRO could be worth $100 billion one day?


im a big fan of Xero so I am biased, but I see no reason it can't get bigger than anyone imagined.


Rod's a smart man. I bet he knew he needed to raise $150m and he did it. I bet he knows he will need to raise more money and maybe even more than this time. And I don't think there's any limit to how many customers Xero will get, just depends on how much money is thrown at it. If by investing $1b Xero can have the potential to go up to $100billion market cap, investors will rush to make it happen

[blobbles]

Is there a tiny chance xro wins 10, 20, 30 or more percent of US market? Is it possible XRO could be worth $100 billion one day?


im a big fan of Xero so I am biased, but I see no reason it can't get bigger than anyone imagined.


Rod's a smart man. I bet he knew he needed to raise $150m and he did it. I bet he knows he will need to raise more money and maybe even more than this time. And I don't think there's any limit to how many customers Xero will get, just depends on how much money is thrown at it. If by investing $1b Xero can have the potential to go up to $100billion market cap, investors will rush to make it happen

Intuit's current market cap is ~ $20 billlion US, if XRO took the entire market you would assume they would be at a similar market cap. But I don't think that is realistic to assume they would take all their customers, so say 50%. That would give them a market cap of $10 billion USD, so even todays value would be quite a discount.

The risks involved between now and taking 50% of the US market though is so long and huge, its probably not open to useful speculation. And that's what the current price represents... a lot of speculation!

[Casino]

Xero is only competing with one of Intuit's products - Quickbooks online:

http://en.wikipedia.org/wiki/Intuit#Products (http://en.wikipedia.org/wiki/Intuit#Products)

Intuit has really stepped up their game by making QBO 'harmony' beautiful and robust. On top of that, they've launched a full-blown counter-attack in Australia:

http://cloudaccountingbuzz.wordpress.com/2013/10/28/intuit-v-xero-or-david-v-goliath-how-are-they-travelling/

Sustaining/defending rapid growth in Australia won't be easy or cheap. Chances are that QBO will crush them there in the long run. They just have more resources to develop and sell the product. At the very least, it eliminates Xero's room to hike prices since they already can't compete on price.

The US is a different beast. Some of the features that QBO needs to develop for Australia are not an issue in the US. Clearly, it's the better product for Americans and it's cheaper. Poking people on Facebook to flip them won't cut it. Intuit does not only have a better product, a cheaper product, more developers, more sales staff and more money; they also have more elbows:

http://en.wikipedia.org/wiki/Intuit#Controversies_and_lobbying

Anyway, good luck riding the next TradeMe to 100 billion.

[Dentie]

I'm no accounting or techie whizz, but what more value does Xero offer than say, MYOB's corresponding online product?

At the risk of creating a thread backlash, I currently use MYOB - which I appear to be able to use either in the cloud - or independently on my desktop (I don't have total confidence in the internet not being interfered with by some smart geek - holding everyone to ransom ....thinking y2k here...!).

I can also make it available to my Accountant (online) if I choose. The level of reporting is great - and the best thing of all is it costs me 20% less than Xero - for the same thing. Hey, my Accountant has actually reduced her charges to me as well - I have freed up a lot of her time so she can enjoy life a bit more. Happy, happy, happy!

[Casino]

I'm no accounting or techie whizz, but what more value does Xero offer than say, MYOB's corresponding online product?



The emperor has no quotes! The Apple of invoicing can't do quotes aka estimates aka proforma invoices. That is a major deal-breaker for many. They haven't been able to fix it for years and it's not because it is of low priority. Even the evangelics are not happy about this:

http://blog.xero.com/2008/12/create-basic-quotes/

[Dentie]

The emperor has no quotes! The Apple of invoicing can't do quotes aka estimates aka proforma invoices. That is a major deal-breaker for many. They haven't been able to fix it for years and it's not because it is of low priority. Even the evangelics are not happy about this:

http://blog.xero.com/2008/12/create-basic-quotes/

That was 3 years ago! Surely they would have fixed that now .... wouldn't they?

[Casino]

No they haven't and you have to get a 3rd party add-on which costs just as much as Xero. How many Americans are going to say 'I'm going to pay a premium to use 2 separate programs that were written for New Zealand?'. But hey they use social media for marketing.

[Casino]

There must be a massive underlying problem that they can't implement it properly. I wouldn't expect it anytime soon and to be cheap.

[Casino]

Based on the ASX close we should expect the open to be $35.95.

Based on previous recent history of when the ASX close is significantly different than the NZX close (either higher or lower) we tend to overshoot that mark on the NZX open and then pull back in the opposite direction for a bit before moving on to what ever trend the day has in hand. Therefore I expect an open price between $36 to $37... After that who knows?? There's been quite a lot of good press around XRO from Friday onwards so I wonder if we in for a good day.

What was the good press?

[Shore]

The extraordinary performance of Xero was a particularly hot topic on the Sharetrader online forum last week.

"I'm holding tight," said one post. "Simply got to ride this one out to find out where exactly our next high altitude base camp will be, and then from there we climb further up the mountain!"

Haha that was me - they must have liked the analogy! Or perhaps just the brazen confidence maybe!

... also, conveniently my supporting statement that followed has been conveniently omitted.

[Toasty]

Some interesting user feedback (http://blog.qbo.intuit.com/2013/10/30/the-new-quickbooks-online-why-design-matters/) about Intuit's Quickbooks Online cloud product. The existing user base sound like they tolerate using QBO or really don't like it.

Compare that to users of Xero who generally rave about it (recent blog post about a Xero update (http://blog.xero.com/2013/10/attach-files-financial-data/#comments)). Make of it what you will.

Disc. hold XRO.

That QB feedback is classic. I know every product has its unsatisfied users as the quote blog article in Xero shows but this is a kicking by any measurement. At least most of the quote comments on Xero suggest that they like the product and are disappointed with the lack of quoting. Quite a few of the comments suggest that they would switch to Xero if Quotes were available.

The QuickBooks article just seems to have released a flood of unhappy QB customers looking for an excuse to get out.

[Casino]

The QuickBooks article just seems to have released a flood of unhappy QB customers looking for an excuse to get out.

It seems the old version of QBO wasn't very good but the completely redesigned new version, which has apparently a little bit of mint.com under the hood, seems very convincing, particularly in the US market.

[Casino]

http://allthingsd.com/20130923/as-competition-for-small-businesses-ramps-up-intuit-overhauls-quickbooks-online/

[Toasty]

http://allthingsd.com/20130923/as-competition-for-small-businesses-ramps-up-intuit-overhauls-quickbooks-online/

Even though there were only three comments on here, two supported Xero as a better product and the last listed a series of complaints about QB and then said they wouldn't be buying it again when they next changed. Small sampling I know but.....

[Casino]

Small sampling I know but..... ... warrants to pay 5 billion dollars for Xero? mortgaging the house? ramping the forum?

[Toasty]

... warrants to pay 5 billion dollars for Xero? mortgaging the house? ramping the forum?

Don't follow you?

[Casino]

Realities have changed a lot over the last weeks. This is the face of what Xero is up against in the US:

http://quickbooks.intuit.com/new/

and yes, it does quotes.

[Toasty]

Realities have changed a lot over the last weeks. This is the face of what Xero is up against in the US:

http://quickbooks.intuit.com/new/

and yes, it does quotes.

Looks like Xero. Still don't follow your last comment.

[Casino]

Looks like Xero. Still don't follow your last comment.

It seemed to me that a few people here are wither immune to massive warning signs or deliberately posting here to ramp people into investing in this. There is a seriousl probability that Xero will shoot under 10$ if we look through the fog.

[Harvey Specter]

It seems the old version of QBO wasn't very good but the completely redesigned new version, which has apparently a little bit of mint.com under the hood, seems very convincing, particularly in the US market.I'm surprised Intuit dont buy Wave which is the business version of Mint - free but makes it money via targeted ad's. WOuld be a natural upgrade path too - start with the free Wave and upgrade to the paid version of QBO.

Note: Ben Kepes suggested XRO would use its war chest to buy Wave or Freshbooks recently (in the WSJ??) to which Rod quickly said BS!

[Toasty]

It seemed to me that a few people here are wither immune to massive warning signs or deliberately posting here to ramp people into investing in this. There is a seriousl probability that Xero will shoot under 10$ if we look through the fog.

So without looking back at my previous posts acknowledging that this is a highly speculative stock and could go either way and that I was investing with my eyes open to the possibilities and that everyone should be doing their own research and buying or not for their own reasons you have accused me of ramping this stock.

I have been invested in this stock since the IPO. I supported it when it dipped into the 60 cent range. My initial capital has been returned with a healthy profit and I still have shares to burn and I have made the comment that I would let this run its course on my remaining investment. People have been talking about bubbles and disasters since day one. So far I have no reason to be upset with my investment even though I know it could turn on me like any other investment that I own.

What I am seeing though is people who are immune to its track record and are determined to down ramp the stock for their own purposes. There is a serious possibility that this share could shoot through $100 if we look through the fog.

[Casino]

I'm surprised Intuit dont buy Wave which is the business version of Mint - free but makes it money via targeted ad's. WOuld be a natural upgrade path too - start with the free Wave and upgrade to the paid version of QBO.

Note: Ben Kepes suggested XRO would use its war chest to buy Wave or Freshbooks recently (in the WSJ??) to which Rod quickly said BS!

Intuit doesn't need wave. They have QBO harmony!!! Xero could try to buy wave but then they would be out of money. They need money, a lot of money. Even if they had wave, they couldn't compete against Intuit because wave is largely in Canada and inferior. Xero will certainly loose people to Wave because it does quotes.

People said that Intuit had golden cuffs because of legacy software. Turns out that Xero has golden cuffs now. They have too much in the bank to do cap raising now but the share price would be favorable. This won't be the case in 2 years.

[Casino]

So without looking back at my previous posts acknowledging that this is a highly speculative stock and could go either way and that I was investing with my eyes open to the possibilities and that everyone should be doing their own research and buying or not for their own reasons you have accused me of ramping this stock.

I have been invested in this stock since the IPO. I supported it when it dipped into the 60 cent range. My initial capital has been returned with a healthy profit and I still have shares to burn and I have made the comment that I would let this run its course on my remaining investment. People have been talking about bubbles and disasters since day one. So far I have no reason to be upset with my investment even though I know it could turn on me like any other investment that I own.

What I am seeing though is people who are immune to its track record and are determined to down ramp the stock for their own purposes. There is a serious possibility that this share could shoot through $100 if we look through the fog.

The track record is a product of fantasy, media hype and deliberate misinformation.

[Casino]

Xero can forget the US and they need to fight to their tooth to maintain traction in Australia now that Intuit is coming after them there.

[Toasty]

The track record is a product of fantasy, media hype and deliberate misinformation.

So its ok for you to bag the stock and claim its all a conspiracy but anyone who supports it is ramping or at best deluded? Just wanting to be sure of your motives.

So whats the pay like at Intuit?

[Shore]

Xero can't control market cap. They've been completely transparent about how many paying customers that they have as opposed to MYOB and Intuit who deliberately set out to hide the real numbers behind the guise of free & trial accounts etc - to me that is misinformation. Xero can't control what one person is prepared to pay another for shares. People are simply forming opinion about Xero's possible place in the global business world and putting their money with their mouths are. If you feel so confident about your own opinion of where Xero is going, then put your money where your mouth is too and short the stock.

[Casino]

Xero can't control market cap. They've been completely transparent about how many paying customers that they have as opposed to MYOB and Intuit who deliberately set out to hide the real numbers behind the guise of free & trial accounts etc - to me that is misinformation. Xero can't control what one person is prepared to pay another for shares. People are simply forming opinion about Xero's possible place in the global business world and putting their money with their mouths are. If you feel so confident about your own opinion of where Xero is going, then put your money where your mouth is too and short the stock.

1. No they don't control market cap but they also don't caution people, which would be the responsible thing to do.
2. Yes Intuit and fresh books massage their numbers. They are accountants, they have to habitually massage numbers so the IRD/IRS doesn't get your money. Maybe it's force of habit. But guess what Intuit is not only a corrupt company, they are also in a corrupt country. If they had an inferior product and Xero would become a threat, they would call up their congressman and make them declare pizza a vegetable:

http://en.wikipedia.org/wiki/Intuit#Controversies_and_lobbying
http://www.stuff.co.nz/life-style/wellbeing/5993939/Pizza-a-vegetable-says-US-Government

3. All that shorting does is to distort markets even further. There is even the risk of a massive short squeeze given these extremely low volumes. So, no thank you.

[Casino]

Point is that Xero has at this stage nothing going for itself in the US and my worry is that they will also get creative about customer numbers so the ship doesn't sink.

[Shore]

No they don't control market cap but they also don't caution people, which would be the responsible thing to do.

Bizarre comment, dude. Bizarre.

[Casino]

Well, companies do have responsibilities if they want to last. For example, you can't come and say

'We’re happy to report that this “Global” region is going gangbusters.'

And then 5 months later, customer numbers are USA + ROW = 16600

http://blog.xero.com/2013/04/heres-to-xero-partners-around-the-world/

Don't you think a chest beating guy like Drury would have told us by now if numbers in the US were soaring? Sometimes no information says a lot.

[Casino]

Let's believe them that numbers of global region are gangbusters. So what are they then in the US if the total is 16600 a few months later?

[Toasty]

Bizarre comment, dude. Bizarre.

He's right. They should have a disclaimer that goes out with every announcement.

"Xero is on track to meet goals but we don't think you should invest in us because we aren't giving you the whole story and we certainly think eventually we will probably fail. We have issued an annual report but its mostly lies and made up stats."

[Casino]

He's right. They should have a disclaimer that goes out with every announcement.

"Xero is on track to meet goals but we don't think you should invest in us because we aren't giving you the whole story and we certainly think eventually we will probably fail. We have issued an annual report but its mostly lies and made up stats."

You are paying 5 billion dollars for a long time of negative cash-flow, inferior product and small market. Can we get transparency and honesty in return? Do you want to be lied to?

[Toasty]

You are paying 5 billion dollars for a long time of negative cash-flow, inferior product and small market. Can we get transparency and honesty in return? Do you want to be lied to?

I'm not paying $5 billion for anything. I am paying an average of 95 cents per share for a great story, a huge opportunity and a great product which has engaged me with my business like no other. Other people seem to think that the company has great prospects which is why the price has attained the height it has and is still going up. Time will tell if they are successful or not.

You on the other hand obviously have an agenda so why don't you tell us about it. Are you really concerned for peoples welfare? Why aren't you over on Rakon warning people to stay away?

[warthog]

Ben Kepes suggested XRO would use its war chest to buy Wave or Freshbooks recently (in the WSJ??) to which Rod quickly said BS!

Yeah, Ben Kepes "suggests" a lot of things. There is a gulf between him and Drury in terms of business strategy (no offence to Cactus gear, which is great).

Drury has an unwavering PR strategy plan that he sticks to (to his credit) without exception: per Farragut, "Damn the torpedoes, full speed ahead!"

You won't hear about what Drury has planned until it has already happened.

[Casino]

I'm not paying $5 billion for anything. I am paying an average of 95 cents per share for a great story, a huge opportunity and a great product which has engaged me with my business like no other. Other people seem to think that the company has great prospects which is why the price has attained the height it has and is still going up. Time will tell if they are successful or not.

You on the other hand obviously have an agenda so why don't you tell us about it. Are you really concerned for peoples welfare? Why aren't you over on Rakon warning people to stay away?

I am concerned about unsustainable practices. It doesn't serve us well. Xero is a great story! In New Zealand that is. Just like TradeMe. TradeMe is a great story. In New Zealand. For a moment it looked like Xero might appeal to the US market. For a moment Team New Zealand looked pretty flash in the America's cup. But you can loose when you raise somebody with a better hand and more chips. For you, buying the company for ~130 million dollars was great. Most likely it won't be for those buying it for 4.5 billion. It can't be. I haven't looked into Rakon. I only started looking into Xero and the sector a few weeks ago. Wasn't hard to spot the red flags.

[Harvey Specter]

I am concerned about unsustainable practices. It doesn't serve us well. Xero is a great story! In New Zealand that is. Just like TradeMe. TradeMe is a great story. In New Zealand. For a moment it looked like Xero might appeal to the US market. For a moment Team New Zealand looked pretty flash in the America's cup. But you can loose when you raise somebody with a better hand and more chips. For you, buying the company for ~130 million dollars was great. Most likely it won't be for those buying it for 4.5 billion. It can't be. I haven't looked into Rakon. I only started looking into Xero and the sector a few weeks ago. Wasn't hard to spot the red flags.Oh No. Not a Team NZ analogy. That is my fear as well.

[Toasty]

I am concerned about unsustainable practices. It doesn't serve us well. Xero is a great story! In New Zealand that is. Just like TradeMe. TradeMe is a great story. In New Zealand. For a moment it looked like Xero might appeal to the US market. For a moment Team New Zealand looked pretty flash in the America's cup. But you can loose when you raise somebody with a better hand and more chips. For you, buying the company for ~130 million dollars was great. Most likely it won't be for those buying it for 4.5 billion. It can't be. I haven't looked into Rakon. I only started looking into Xero and the sector a few weeks ago. Wasn't hard to spot the red flags.

You win. I will call the NZX and ask them to reduce the share price for something more manageable for NZ investors. How does $5 sound.

You might want to call Rod and let him know that it hasn't worked. He doesn't seem to have heard and Xero still seems to be going ahead so you better get the word out.

I feel a lot better knowing someone is looking out for me. Where were you when I bought some Diligent shares at $5:30?

[skid]

Toasty-
Congrats as you have obviously hit the jackpot.
You can afford to sit back and ride this present day wave of optimism.
But for those thinking about buying in at $35 a little caution is not necessarily a bad thing.
If you are truly convinced this is the great share you say,then a bit of cage rattling shouldn't phase you.

[Casino]

You win. I will call the NZX and ask them to reduce the share price for something more manageable for NZ investors. How does $5 sound.

You might want to call Rod and let him know that it hasn't worked. He doesn't seem to have heard and Xero still seems to be going ahead so you better get the word out.

I feel a lot better knowing someone is looking out for me. Where were you when I bought some Diligent shares at $5:30?

I lost money on silly bets around 10 years ago. Could have listened to warnings and there were many but I was in love with some stocks. Identified myself with something stupid instead of scrutinising the people I was giving my money to. Rod knew that he is in serious trouble when Brad Smith said 'I wanna hug you':

http://blog.xero.com/2013/11/poking-bear/

The only way to prolong demise is raising cap to fight for market share. So he must say that things are going well but for how long can he. Now a question for you: Why should someone in the US go for Xero?

[Toasty]

Toasty-
Congrats as you have obviously hit the jackpot.
You can afford to sit back and ride this present day wave of optimism.
But for those thinking about buying in at $35 a little caution is not necessarily a bad thing.
If you are truly convinced this is the great share you say,then a bit of cage rattling shouldn't phase you.

Caution is fine and I have no problem with that. I object to people accusing me of ramping or misleading potential investors. And I also object to the categorising of the information coming out of Xero as deliberate misinformation. These are pretty big concepts but luckily Casino has weeks of experience with Xeros back story and has declared that they are lying to the public.

I have stated repeatedly that I don't mind people pointing out why they think it won't work and supporting that with a rational argument but I am not into NBR style "Its a Ponzi scheme" comments.

[Everwood]

Could someone please give me a brief overview of what the article says in the NBR “Xero can win - analyst models share price scenarios from 'US fail' to 'US Blue Skies”

[Casino]

Caution is fine and I have no problem with that. I object to people accusing me of ramping or misleading potential investors. And I also object to the categorising of the information coming out of Xero as deliberate misinformation. These are pretty big concepts but luckily Casino has weeks of experience with Xeros back story and has declared that they are lying to the public.

I have stated repeatedly that I don't mind people pointing out why they think it won't work and supporting that with a rational argument but I am not into NBR style "Its a Ponzi scheme" comments.

Sorry, maybe I was unfair. Can you please comment on this blog post of Xero:

http://blog.xero.com/2013/04/heres-to-xero-partners-around-the-world/

We’re happy to report that this “Global” region is going gangbusters. Sine you know the company inside out can you please enlighten me how many of the 16600 are in the US and how many are in ROW. How do you rate that as a success? Is this reason for huge optimism? Since you use Xero yourself, how do you go about quotes? Do you need to send quotes?

[Casino]

Could someone please give me a brief overview of what the article says in the NBR “Xero can win - analyst models share price scenarios from 'US fail' to 'US Blue Skies”

wasn't worth the paper? it was written on. don't worry about it. How can you write a report and forget to mention aggressive expansion plans of global giant with a super beefed-up product that costs less.

[tzbang]

I
Now a question for you: Why should someone in the US go for Xero?

Here are some of the things which set Xero apart from Quickbooks
http://blog.xero.com/2013/03/xero-and-quickbooks-beyond-the-5-stars/

[Casino]

Here are some of the things which set Xero apart from Quickbooks
http://blog.xero.com/2013/03/xero-and-quickbooks-beyond-the-5-stars/

Seriously March 2013? Knowing your competition is a fundamental thing to investing!!!!! They have foils now in case you haven't noticed.

[Harvey Specter]

Could someone please give me a brief overview of what the article says in the NBR “Xero can win - analyst models share price scenarios from 'US fail' to 'US Blue Skies”Nothing concrete - it was just an opinion piece by their tech writer.

I recommend you read the NBR over the weekend - they unlock a lot of there content then or for new Weekend content, dont lock it till monday.

[Casino]

How is it that there are over 200 pages of yeah I'm riding this crap here and nobody has ever asked about the functionality of quotes?

[Cricketfan]

How is it that there are over 200 pages of yeah I'm riding this crap here and nobody has ever asked about the functionality of quotes?

Also, why aren't they losing more customers due to this lack of functionality? The fact that they are retaining this many customers (though some may be annoyed as per the blog comments) must mean something.

[tzbang]

I don't know about other businesses, but where I work, the lack of quotes just doesn't affect us. Our quotes are prepared separately and assigned numbering which is related to specific products and product orders. I doubt we would want to have these quotes mixed up in our actual accounts. For running invoices we use 'draft' invoices in Xero which allows us to easily see how much 'work is on the boil' so to speak.

[Casino]

Also, why aren't they losing more customers due to this lack of functionality? The fact that they are retaining this many customers (though some may be annoyed as per the blog comments) must mean something.

This many customers? Where? You mean in New Zealand? The market that Intuit said they're not even going to bother with? Sure, some may not care about this feature, some are happy to pay extra for that functionality. But there are a lot of people who would like to be able to tell their clients how much a service or product is going to cost. At the moment, in Australia, QBO and Xero are on equal footing and it comes down to what is more important to you:

http://businesseez.com.au/_blog/blog/post/i/

Who is giong to fix their issues first? The guys with the money or the guys who couldn't for the last three years?

[Harvey Specter]

Could someone please give me a brief overview of what the article says in the NBR “Xero can win - analyst models share price scenarios from 'US fail' to 'US Blue Skies”Nothing concrete - it was just an opinion piece by their tech writer.

I recommend you read the NBR over the weekend - they unlock a lot of there content then or for new Weekend content, dont lock it till monday.

[Casino]

The issues that QBO has are Australia-specific. In the US, they are ahead in every way. Good luck finding 7000000 users with an inferior product that is more expensive! A lot of riding...

[apac]

The issues that QBO has are Australia-specific. In the US, they are ahead in every way. Good luck finding 7000000 users with an inferior product that is more expensive! A lot of riding...

I have a feeling you will be banned soon, your comments have no value and just offend people.

[Casino]

coming from you that's a compliment. how far along the 100 billion mark are we? btw, when I say they can't do quotes, I also mean that they can't do purchase orders without the extra add-on.

[apac]

coming from you that's a compliment. how far along the 100 billion mark are we? btw, when I say they can't do quotes, I also mean that they can't do purchase orders without the extra add-on.

Talking to you on a forum is the perfect way to practice patience

[Beagle]

Can someone tell me if XRO has an inventory system or a full functionality fixed asset register system ? I would have thought proper functionality of these systems would be a prerequisite for many business users and I couldn't see them on a brief report I looked at a while back.

For the record I am not shorting this stock at present up to this point, (won't rule out going short if there's lots more froth coming) but at this price i'd rather put $35,000 on red on the roulette wheel at the Casino as I would fancy my chances better than going long on 1,000 XRO shares.

[Toasty]

Talking to you on a forum is the perfect way to practice patience

I wouldn't even bother. 44 posts and all about Xero. No other threads touched. He's just a plant from a competitor or someone looking to try and move the stock for their own purposes, or most likely just a ...troll... Not here for any productive purpose.

[blackcap]

Roger, Im with you on the shorting scenario. I am just trying to find the correct product to short XRO. A naked stock short is a bit risky in my opinion and you would need deep pockets because its not out of the question that XRO trades at $100 or thereabouts in the next 6 months. But purchasing a put option may be the way to go. Just trying to find someone willing to write or offer this instrument is the challenging part. Does anyone know any market that offers calls and puts on XRO? Maybe turmeric or toasty is willing to offer something? Just for you XRO fans... how would you price a 36 month dated put option, strike price $10, strike price $20?

[Casino]

I wouldn't even bother. 44 posts and all about Xero. No other threads touched. He's just a plant from a competitor or someone looking to try and move the stock for their own purposes, or most likely just a ...troll... Not here for any productive purpose.

yes that's very plausible. think what you want but one day you can't escape reality. Why don't you use this opportunity to convince me that I too should back this company at this price?

[Toasty]

Roger, Im with you on the shorting scenario. I am just trying to find the correct product to short XRO. A naked stock short is a bit risky in my opinion and you would need deep pockets because its not out of the question that XRO trades at $100 or thereabouts in the next 6 months. But purchasing a put option may be the way to go. Just trying to find someone willing to write or offer this instrument is the challenging part. Does anyone know any market that offers calls and puts on XRO? Maybe turmeric or toasty is willing to offer something? Just for you XRO fans... how would you price a 36 month dated put option, strike price $10, strike price $20?

Sorry Blackcap. Not an area I have played in before. I generally steer clear of anything other than buy and hold positions. My trading record is sketchy at best.

[gv1]

yes that's very plausible. think what you want but one day you can't escape reality. Why don't you use this opportunity to convince me that I too should back this company at this price?
Well, that yours job, move your b.. and do it yourself. no free loaders here.

[Casino]

Roger, Im with you on the shorting scenario. I am just trying to find the correct product to short XRO. A naked stock short is a bit risky in my opinion and you would need deep pockets because its not out of the question that XRO trades at $100 or thereabouts in the next 6 months. But purchasing a put option may be the way to go. Just trying to find someone willing to write or offer this instrument is the challenging part. Does anyone know any market that offers calls and puts on XRO? Maybe turmeric or toasty is willing to offer something? Just for you XRO fans... how would you price a 36 month dated put option, strike price $10, strike price $20?

shorts will drive it to those prices. the volumes are very low and the stock is easy to manipulate. the high price is a result of that. be careful. any will derivative will be hugely expensive due to volatility. the pop may not come for some time. maybe a small correction if honest US numbers are reported soon but I wouldn't put it past them to be fabricate them. I think QBO needs ~1 year or more till the dent in the Australian business will be obvious. They are just rolling it out now and need to fix the BaS and bank stream thing. Once that is in place, bye bye Australia.

@Roger, I think Xero doesn't do inventory but I'm not sure how important that is. People that move to the cloud are really small businesses or sole traders. They don't need inventory or payroll. But they need quotes...

[blackcap]

Sorry Blackcap. Not an area I have played in before. I generally steer clear of anything other than buy and hold positions. My trading record is sketchy at best.
Fair call Toasty... if you do not understand options and how they work its best to steer well clear. As a rule I do not use them often but so now and then an opportunity may arise. Like after the GFC in 2008, buying some long dated deep out of the money calls was my strategy.

[Toasty]

Fair call Toasty... if you do not understand options and how they work its best to steer well clear. As a rule I do not use them often but so now and then an opportunity may arise. Like after the GFC in 2008, buying some long dated deep out of the money calls was my strategy.

Definitely something I would like to explore but would require very careful dipping of toes into shallow water first. Probably shadow style trading to start.

[Casino]

Definitely something I would like to explore but would require very careful dipping of toes into shallow water first. Probably shadow style trading to start.

They can be useful as insurance. If you have a lot of exposure to Xro and you are bullish you could buy puts to reduce your risk. It will ruin you if you use them for gambling.

[Longhaul]

Xero has just released support for Purchase Orders - apparently their most requested feature. Turning attention to quotes and inventory control.

Sounds like they are fleshing out their offering, I've never used it so don't have any firsthand experience of what it can and can't do.

See their latest blog about the update for more information - http://blog.xero.com/2013/11/purchase-orders/#comments

[Casino]

Xero has just released support for Purchase Orders - apparently their most requested feature. Turning attention to quotes and inventory control.

Sounds like they are fleshing out their offering, I've never used it so don't have any firsthand experience of what it can and can't do.

See their latest blog about the update for more information - http://blog.xero.com/2013/11/purchase-orders/#comments

That's very good news for them and is encouragement that they can do quotes in a timely fashion. Believe me, they need to.

[peat]

Exchange Traded Options

No Exchange Traded Options are available over the security XRO
Warrants & Structured Products

No warrants & Structured Products are available over the security XRO
ASX CFDs

No Contracts For Differences are available over the security XRO

[bobxia]

small turnover today, only $3.6m so far. I wonder is that because it's US holiday today.

[Beagle]

I wouldn't even bother. 44 posts and all about Xero. No other threads touched. He's just a plant from a competitor or someone looking to try and move the stock for their own purposes, or most likely just a ...troll... Not here for any productive purpose.

I think Casino has added a lot to this thread and taken the time to make many constructive (and well supported with links and other data) comments and quite obviously has a wealth of experience in share investing. I'm sure in time Casion will add a lot of highly useful content and opinion in other threads. Just because someone is a new entrant to the forum doesn't mean they don't have heaps of useful information to share and I for one have really enjoyed the objectivity and well articulated posts to date and look forward to hearing opinions on other stocks. Maybe so far he's taken an interest because he's taken the view that small investors could be burned by so many people trying to deliberatly ramp up the share price and has a concern that people are more informed ? Plenty of useful information and links in his posts unlike some of the other mindless pumping-up of the share price by a minority of other posters.

Roger, Im with you on the shorting scenario. I am just trying to find the correct product to short XRO. A naked stock short is a bit risky in my opinion and you would need deep pockets because its not out of the question that XRO trades at $100 or thereabouts in the next 6 months. But purchasing a put option may be the way to go. Just trying to find someone willing to write or offer this instrument is the challenging part. Does anyone know any market that offers calls and puts on XRO? Maybe turmeric or toasty is willing to offer something? Just for you XRO fans... how would you price a 36 month dated put option, strike price $10, strike price $20?

Its a real shame we don't have a more developed market here, I am sure you would agree mate.


shorts will drive it to those prices. the volumes are very low and the stock is easy to manipulate. the high price is a result of that. be careful. any will derivative will be hugely expensive due to volatility. the pop may not come for some time. maybe a small correction if honest US numbers are reported soon but I wouldn't put it past them to be fabricate them. I think QBO needs ~1 year or more till the dent in the Australian business will be obvious. They are just rolling it out now and need to fix the BaS and bank stream thing. Once that is in place, bye bye Australia.

@Roger, I think Xero doesn't do inventory but I'm not sure how important that is. People that move to the cloud are really small businesses or sole traders. They don't need inventory or payroll. But they need quotes...

I'm amazed it has taken them so long to get this basic functionality. I have many small clients who've had simple systems like quick books which cost them a one-off pittance and have had this functionality for many many years. Really I fail tto see what all the hype with XRO is all about. Quite frankly I think is absolutly pathetic they havn't had quotes in their system for 6 1/2 years, really come on, I would have thought this is an absolute must have for any tradesman or sole trader and this should have been operational as part of the core package from day 1. Its an epic fail that it wasn't in my opinion.


Xero has just released support for Purchase Orders - apparently their most requested feature. Turning attention to quotes and inventory control.

Sounds like they are fleshing out their offering, I've never used it so don't have any firsthand experience of what it can and can't do.

See their latest blog about the update for more information - http://blog.xero.com/2013/11/purchase-orders/#comments
Thanks for the link. Inventory is also part of the key functionality that I would have thought many small business owners would have required from day 1. I'm seriously underwhelmed it wasn't.


Exchange Traded Options

No Exchange Traded Options are available over the security XRO
Warrants & Structured Products

No warrants & Structured Products are available over the security XRO
ASX CFDs

No Contracts For Differences are available over the security XRO

I guess manipulation is the key concern.
Well...my thoughts in summary... I've seen many accounting systems over the years and frankly can't see what all the fuss is about with this one. Its not like they've totally re-invented the wheel, anything but.

[blackcap]

Exchange Traded Options

No Exchange Traded Options are available over the security XRO
Warrants & Structured Products

No warrants & Structured Products are available over the security XRO
ASX CFDs

No Contracts For Differences are available over the security XRO

Who is that with Peat? I know IG markets offer CFD's on XRO in Australia. So you can go short there.... :)

[TimmyTP]

Who is that with Peat? I know IG markets offer CFD's on XRO in Australia. So you can go short there.... :)
That's on-exchange derivatives.
ASX offers options on many equities, a handful of futures and various other instrument types.
I'm not sure what the criteria is for them to list an option, but clearly not at the moment for XRO.

Out of interest, they also allow simple strategies to be created on request, between certain instruments - up to 4 instruments in total per strategy. Not sure whether they are offered by retail brokers though - maybe someone on the ASX forum would know.

[blackcap]

Thanks for clarifying my request there TimmyTP. Good to know. I really need to do more homework on the ASX and specially in regard to what brokers there are offering. I know the NZX is starting a futures and options exchange soon (they say) and with XRO capitalisation now being up there they may offer a variety of products. For some that have got XRO and have ridden them up a put option is a nice way of guaranteeing a minimum price and giving you the upside as well (off course for a small premium)

[Lorne Ranger]

Bored with this forum. Ill hold my Xero shares in silence, as per Oscar Wilde's wisdom. Too much bitterness and jaded opinions. I dont want to trawl through personal opinion about the software features, or how easy it is to replicate when it obviously isn't. Or how someone cant understand the price etc etc. It's becoming like talk back radio.

See you on another site.....

[Casino]

Well...my thoughts in summary... I've seen many accounting systems over the years and frankly can't see what all the fuss is about with this one. Its not like they've totally re-invented the wheel, anything but.

Cheers Roger - just as clarification for others, the only NZX position that I hold is PEB, which isn't risk-free either. Actually one of the biggest risks that I see for PEB is that the market may indiscriminately punish it, should XRO pop. So for me to state the obvious and say that XRO is more than full priced goes against my own interest. I only started looking into XRO because I was curious how these market caps are justified. Obviously the software is nothing special and the financials don't add up but I think I am starting to understand the hype. It's not just using buzz words. Xero doesn't offer just an incomplete and expensive accounting solution, they offer a community, a religious cult, where followers help each other and find purpose in life: https://community.xero.com/business/topic/23/
The interactive group dynamic makes people blind or more forgiving to some of the obvious problems that Xero has. You don't have to be an accountant to tell that they got even the basics wrong. We've talked about the quotes, inventory, etc. You can get away with that here but it's a different story in the US: http://www.linkedin.com/groups/Why-Xero-doesn-t-work-1415817.S.5798052954527248386?qid=1952aa84-d104-4b0a-a927-c3d404ca13b9&trk=groups_items_see_more-0-b-ttl

Meanwhile, Intuit devotes its resources to build this complete business solution cloud behemoth, which is way beyond Xero's means: http://www.sleeter.com/blog/2013/10/intuit-business-operating-system/
US accountants and businesses will not want a half-baked open-source project from New Zealand. I am not even sure if all Aussies will opt for the Kiwi solution when they have a cheaper option from Australia or the US. Intuit has survived far more formidable opponents and they have the playbook. Let's not kid ourselves.

[winner69]

Cheers Roger - just as clarification for others, the only NZX position that I hold is PEB, which isn't risk-free either. Actually one of the biggest risks that I see for PEB is that the market may indiscriminately punish it, should XRO pop. So for me to state the obvious and say that XRO is more than full priced goes against my own interest. I only started looking into XRO because I was curious how these market caps are justified. Obviously the software is nothing special and the financials don't add up but I think I am starting to understand the hype. It's not just using buzz words. Xero doesn't offer just an incomplete and expensive accounting solution, they offer a community, a religious cult, where followers help each other and find purpose in life: https://community.xero.com/business/topic/23/
The interactive group dynamic makes people blind or more forgiving to some of the obvious problems that Xero has. You don't have to be an accountant to tell that they got even the basics wrong. We've talked about the quotes, inventory, etc. You can get away with that here but it's a different story in the US: http://www.linkedin.com/groups/Why-Xero-doesn-t-work-1415817.S.5798052954527248386?qid=1952aa84-d104-4b0a-a927-c3d404ca13b9&trk=groups_items_see_more-0-b-ttl

Meanwhile, Intuit devotes its resources to build this complete business solution cloud behemoth, which is way beyond Xero's means: http://www.sleeter.com/blog/2013/10/intuit-business-operating-system/
US accountants and businesses will not want a half-baked open-source project from New Zealand. I am not even sure if all Aussies will opt for the Kiwi solution when they have a cheaper option from Australia or the US. Intuit has survived far more formidable opponents and they have the playbook. Let's not kid ourselves.

Wow ...what a post

Just as well the Lone Ranger has left this site eh

[Tibbers]

You can get away with that here but it's a different story in the US: http://www.linkedin.com/groups/Why-Xero-doesn-t-work-1415817.S.5798052954527248386?qid=1952aa84-d104-4b0a-a927-c3d404ca13b9&trk=groups_items_see_more-0-b-ttl.

So the software doesn't work for one person, and multiple valid workarounds were given....

How about this one:
http://blog.qbo.intuit.com/2013/11/02/what-to-expect-from-the-new-quickbooks-online/#comment-12245
"I’d like to see a way to give someone access to just enter ‘enter’ bills without seeing the bank account balances."


US accountants and businesses will not want a half-baked open-source project from New Zealand.

open-source? I suggest you keep reading mate. Perhaps start here:
www.microsoft.com/casestudies/ServeFileResource.aspx?4000029346

[Casino]

So the software doesn't work for one person, and multiple valid workarounds were given....

How about this one:
http://blog.qbo.intuit.com/2013/11/02/what-to-expect-from-the-new-quickbooks-online/#comment-12245
"I’d like to see a way to give someone access to just enter ‘enter’ bills without seeing the bank account balances."



open-source? I suggest you keep reading mate. Perhaps start here:
www.microsoft.com/casestudies/ServeFileResource.aspx?4000029346

1. Yes, they had a lot of complaints about the old QBO and Xero looked good. Tables have turned reminiscent of the America's cup.
2. Yes, I know that you can rent server space. So can Intuit. They have more money, they can get ore servers. Still, there are a lot of holes in Xero that third-parties have to fill. I don't think it's ideal especially when it's for trivial things.

It comes always back to the same thing. How big is the market? How much of it can they get? How are they going to get it? What are the hindrances?

[Beagle]

I suspect a significant driver behind XRO's growth to date in N.Z. is that Accountants in N.Z. have been roped into supporting this company based at least to some extent on its kick-back payment system, why else would you recommend what ostensibly amounts to a system short on features and functionality ?

I know a couple of people in the local community who are really annoyed at the way their accountant preeches the virtues of the XRO system with almost evangalistic fervor and they've told me they won't change from their existing systems which not only works fine but has significantly more functionality than XRO. I've told them i'm more than happy to take them on as clients with their existing accounting system.

I predict an epic fail in the U.S.

[Casino]

^^ Looks like XRO employees have been roped into spreading the word.

I suspect a significant driver behind XRO's growth to date in N.Z. is that Accountants in N.Z. have been roped into supporting this company based at least to some extent on its kick-back payment system, why else would you recommend what ostensibly amounts to a system short on features and functionality ?

I know a couple of people in the local community who are really annoyed at the way their accountant preeches the virtues of the XRO system with almost evangalistic fervor and they've told me they won't change from their existing systems which not only works fine but has significantly more functionality than XRO. I've told them i'm more than happy to take them on as clients with their existing accounting system.

I predict an epic fail in the U.S.

It's nothing short of a cult. Go and browse their community pages. It's really scary.

[Beagle]

As soon as I have some spare time I'll have a look but in the meantime i'm more than happy to take your word for it. Thanks again for all your useful links :)
We should have a chat about PEB on that thread soon.

[Casino]

And don't forget to count how many Americans are on their forums. Something tells me that they will boast about their US growth at the next analysts conference so you gotta be on your toes.

[Longhaul]

Methinks this thread has been struck with a touch of altitudinous papaver somniferum disorder, aka tall poppy syndrome.

[Cricketfan]

It's nothing short of a cult. Go and browse their community pages. It's really scary.

A cult could be a good investment. Do you know how many Americans belong to cults??

[Lost in space]

Methinks this thread has been struck with a touch of altitudinous papaver somniferum disorder, aka tall poppy syndrome.

Quite so. I think a couple of posters could well be able to set up their own thread and seem to have enough imagination to come up with some great titles. Maybe: "Non-delusional Non-Xero investors who have an obsession to enlighten and save Xero stock holders" and they can knock themselves out posting back and forward to each other.

[winner69]

Talking of cults I wonder if Lone Ranger is in this video
http://www.ted.com/talks/derek_sivers_how_to_start_a_movement.html

[Tibbers]

1Yes, I know that you can rent server space. So can Intuit.

That link wasnt about server space, it was about how they use a Microsoft platform not a "Open source" one.


It's nothing short of a cult. Go and browse their community pages. It's really scary.

People say that about Apple products and look where they ended up....

[Casino]

That link wasnt about server space, it was about how they use a Microsoft platform not a "Open source" one.



People say that about Apple products and look where they ended up....


There are definitely parallels between Apple and Xero in that regard. I wrote that in one of my earlier posts. It was just an observation that offers insight into the irrational stock price and admiration for an incomplete accounting solution. And here is what people should think about before drinking the the kool-aid. A few weeks ago, everyone thought that Xero had a massive headstart on Intuit. QBO looked clunky and Xero in good shape. We thought that Intuit was years away to come up with something that can rival Xero. Turns out that they have something that is more functional and cheaper today.

Any accountant that forces Xero on their US clients risks their reputation and peers will regard them as affiliate marketers only. On top of that, those accountants will have to work with a frustrating program that relies on too many 3rd party solutions and community support. Is this the best long-term solution for any serious business? Would you trust all your or your clients' finances to a foreign company that may go bust further down the road? How do you break your clients that they have to wait for some time next year before they can issue quotes?

http://boxfreeit.com.au/2013/11/11/xero-finally-adds-purchase-orders-quotes-to-come-next-year/

In fact, Kiwis should ask their accountants why they prefer Xero. Hopefully it's not just for the commission?

How future-proof is their technology if it takes them more than 3 years to integrate the functionality of quotes. Do they have sufficient cash-flows to pay for Microsoft servers? Btw, Microsoft and Intuit have an interesting history. One red flag should be enough to stop you from investing into a speculative stock. I think it's easy to see a lot of red flags even if you barely scrape the surface.

[Casino]

Unfortunately Xero doesn't have a big budget for marketing but they should run a TV ad in the states:

'The Apple of accounting - Pay a premium today, get rudimentary functionality tomorrow.'

[apac]

There are definitely parallels between Apple and Xero in that regard. I wrote that in one of my earlier posts. It was just an observation that offers insight into the irrational stock price and admiration for an incomplete accounting solution. And here is what people should think about before drinking the the kool-aid. A few weeks ago, everyone thought that Xero had a massive headstart on Intuit. QBO looked clunky and Xero in good shape. We thought that Intuit was years away to come up with something that can rival Xero. Turns out that they have something that is more functional and cheaper today.

Any accountant that forces Xero on their US clients risks their reputation and peers will regard them as affiliate marketers only. On top of that, those accountants will have to work with a frustrating program that relies on too many 3rd party solutions and community support. Is this the best long-term solution for any serious business? Would you trust all your or your clients' finances to a foreign company that may go bust further down the road? How do you break your clients that they have to wait for some time next year before they can issue quotes?

http://boxfreeit.com.au/2013/11/11/xero-finally-adds-purchase-orders-quotes-to-come-next-year/

In fact, Kiwis should ask their accountants why they prefer Xero. Hopefully it's not just for the commission?

How future-proof is their technology if it takes them more than 3 years to integrate the functionality of quotes. Do they have sufficient cash-flows to pay for Microsoft servers? Btw, Microsoft and Intuit have an interesting history. One red flag should be enough to stop you from investing into a speculative stock. I think it's easy to see a lot of red flags even if you barely scrape the surface.

So tell me how much do u think Xero is worth and why?

[Casino]

So tell me how much do u think Xero is worth and why?

back of the envelope, I'd say current annualized revenue (73 million) times 6= 440 million + 250 in the bank = ~700million + 300 million for fantasy and entertainment value= 1 billion/~130million shares=~$7. You shouldn't complain being able to sell it for anything above $3.5.

[Dentie]

There are definitely parallels between Apple and Xero in that regard. I wrote that in one of my earlier posts. It was just an observation that offers insight into the irrational stock price and admiration for an incomplete accounting solution. And here is what people should think about before drinking the the kool-aid. A few weeks ago, everyone thought that Xero had a massive headstart on Intuit. QBO looked clunky and Xero in good shape. We thought that Intuit was years away to come up with something that can rival Xero. Turns out that they have something that is more functional and cheaper today.

Any accountant that forces Xero on their US clients risks their reputation and peers will regard them as affiliate marketers only. On top of that, those accountants will have to work with a frustrating program that relies on too many 3rd party solutions and community support. Is this the best long-term solution for any serious business? Would you trust all your or your clients' finances to a foreign company that may go bust further down the road? How do you break your clients that they have to wait for some time next year before they can issue quotes?

http://boxfreeit.com.au/2013/11/11/xero-finally-adds-purchase-orders-quotes-to-come-next-year/


In fact, Kiwis should ask their accountants why they prefer Xero. Hopefully it's not just for the commission?

How future-proof is their technology if it takes them more than 3 years to integrate the functionality of quotes. Do they have sufficient cash-flows to pay for Microsoft servers? Btw, Microsoft and Intuit have an interesting history. One red flag should be enough to stop you from investing into a speculative stock. I think it's easy to see a lot of red flags even if you barely scrape the surface.

In fact, I wonder how many disclose this to their clients .... or have a disclaimer to protect them from having to??

[flipbot]

There's a lot of talk about David vs Goliath, and who will win the US market. I don't know that we can say that cloud accounting, and eventually the wider business SaaS offerings of Xero and Intuiit is a winner-takes-all situation. It's not a facebook, eBay, Amazon situation where getting the critical mass of community members means you become unstoppable. Market share is important, but can't be pursued at the cost of quality of product (arguably in other situations this is possible).

Also Intuit may have a lot of cash, but doesn't mean they automatically win everything. The fast moving smaller company has other advantages that can mitigate a fat wallet.

Finally all this quibbling about quotes and inventory is a total distraction from the wider product, and associated business strategy. Xero has continued to do the right things. I think a danger for them now is that they are becoming legitimate, and finally brokers have released valuations for them in a bid to 'jump on board' and pick a winner. I think this has supported hype in the shareprice, and that hype will respond positively or negatively to upcoming announcements. But I think that the SP hype largely doesn't affect how Xero executes. Behind the shareprice is a company doing good things, with a product that has been a game changer in my experience.

[Beagle]

Quite so. I think a couple of posters could well be able to set up their own thread and seem to have enough imagination to come up with some great titles. Maybe: "Non-delusional Non-Xero investors who have an obsession to enlighten and save Xero stock holders" and they can knock themselves out posting back and forward to each other.

Some of you newbies should be so lucky that some very experienced investors, (who are unbiased and independent of having a position in this stock), have used up so much of their time bringing some objectivity to this thread. I believe all did out of an honourable motivation to make newbies aware that some of this stock is based on pure hype and speculation and nothing more than a momentum play. I've done my bit as I feel have many others such as Snoopy, Casino and others. Good luck to all investors.

[Casino]

There's a lot of talk about David vs Goliath, and who will win the US market. I don't know that we can say that cloud accounting, and eventually the wider business SaaS offerings of Xero and Intuiit is a winner-takes-all situation. It's not a facebook, eBay, Amazon situation where getting the critical mass of community members means you become unstoppable. Market share is important, but can't be pursued at the cost of quality of product (arguably in other situations this is possible).

Also Intuit may have a lot of cash, but doesn't mean they automatically win everything. The fast moving smaller company has other advantages that can mitigate a fat wallet.

Finally all this quibbling about quotes and inventory is a total distraction from the wider product, and associated business strategy. Xero has continued to do the right things. I think a danger for them now is that they are becoming legitimate, and finally brokers have released valuations for them in a bid to 'jump on board' and pick a winner. I think this has supported hype in the shareprice, and that hype will respond positively or negatively to upcoming announcements. But I think that the SP hype largely doesn't affect how Xero executes. Behind the shareprice is a company doing good things, with a product that has been a game changer in my experience.

Great, we're making progress and starting to acknowledge that there is a problem. Let's tackle the 'Maybe it's not so bad?' issue.

Just a few thoughts:
1. Is it a winner takes all situation? We don't know yet. Unfortunately Xero is priced as if it already was one of the main winners but they have nothing going for them to even get a small slice of the US pie.
2. Money talks. You need it to have a good product, bribe accountants, product support.
3. Xero is small but does that make it faster? Look how quickly Intuit reacted to Xero!!! Look how long it takes Xero to offer quotes...Loss-making small companies are fast at running out of cash.
4. Xero's wider product is based on open-APIs. That's why dubbing it the Apple of accounting is probably the worst misnomer in business history. If your computer needs it, Apple puts it in. If Xero needs a functionality, the community who also provides a lot of the tech support has to develop it. That makes Xero the Linux for accounting. It's for weirdos. Just go on their Facebook page and look how people respond to the late release of POs. Demanding customers, which is the norm on the planet, don't react like that. Btw, looking at how long it takes to implement things like quotes should be taken as a warning sign that there is something fundamentally flawed with the architecture of Xero.
5. I agree with you on your last point. Share price hypes are bad for companies!!!! They destroy companies. It's like hugging a baby too tightly. The immediate risk for Xero now is a plummeting share price due to no uptake in the US. Desperate times will call for desperate measures. Will they blatantly lie to investors about uptake? Wouldn't be the first time a company would do that. Will they blow their money on an acquisition to change things around? Will they consider an ad-based model if there is no uptake for paid subscription?

[Casino]

My hopes aren't very high but maybe one day people will realise that bubbles destroy good businesses and just burn our money overseas. It reduces our wealth. It changes a hard-working society to a nation of gamblers. And in the end, only the Casino wins.

[Lost in space]

Some of you newbies should be so lucky that some very experienced investors, (who are unbiased and independent of having a position in this stock), have used up so much of their time bringing some objectivity to this thread. I believe all did out of an honourable motivation to make newbies aware that some of this stock is based on pure hype and speculation and nothing more than a momentum play. I've done my bit as I feel have many others such as Snoopy, Casino and others. Good luck to all investors.

Really? You would have to be very very experienced indeed to have more experience than me in the stockmarket I can assure you. Have been very involved in the stockbroking fraternity and very comfortable with my credentials Roger.

[flipbot]

1. Is it a winner takes all situation? We don't know yet. Unfortunately Xero is priced as if it already was one of the main winners but they have nothing going for them to even get a small slice of the US pie.


I think it's clear that Xero has something going for it, more or less depending what side of the fence you choose to sit on. This kind of comment doesn't provide any grist for the discussion.

Regarding point 5 I think a falling share price is less of an issue than you make out. The cash is still there, the people are on the ground in the states, and at the higher levels e.g Thiel and co. Execution is what matters long term, not share price. The problem for Xero now is getting more US customers. We've seen them grow customers and revenue over the last few years in other regions so we know they have a plan here.

Your assumption is that they can't possibly get enough customers in the US. It looks like others disagree :) Evidence shows they can build a good product and they are responsive to customers - hence the 'cult' like following. Can they execute in the US? They are well placed to do so, as a small growing company with big dreams tied to good execution. Is there risk? Hell yeah. Are we playing tiddlywinks? Hell no.

[Ginger_steps_]

Bubble bubble bubble, not good enough, under performing software, will never crack the states - thats all I hear on here now - I hardly look at this Xero thread anymore as it full of nay sayers who didnt get in while it was cheap. Why else would you all be so emotional? If I didnt like a stock I would just ignore it and spend my time elsewhere instead of trying to convince all the VERY HAPPY holders that the apocalypse is coming. But the anger of missing out just keeps niggling at you doesn't it? Ill give you all a big hug and a nice warm glass of milk to sooth the pain if you like.

A company doesn't have the best product in the market to to become the leader it just has to be the best at marketing its product, be easy to use (for the average punter wanter to learn a bit about their own accounting), have some financial backing (Peter Thiel speaks for himself!!) and have nice design/aesthetics. Theyve had soooo much exposure now that I cant see how they wont make it really - their product IF sub-grade will catch up and overtake in no time. Theres also the small matter of how many awards their software has won in the accounting industry.. But its the industry's word against yours - I know who i'm siding with.
So to all of you negative nelly's I say start your own thread and throw your sad wallets at each other in there in there so we can have our thread back. Oh and see you at $100 Suuuuuucccckkkkkeeeerrrsss!

[Casino]

I think it's clear that Xero has something going for it

I don't see what do would be.


Regarding point 5 I think a falling share price is less of an issue than you make out.

Falling share prices make people angry. Who knows, maybe even some of the invested evangelics may loose their faith once it hurts them in their pocket. People don't just give you money and ask for nothing in return. Maybe Thiel will push for more aggressive decisions once it dawns on him how desperate the situation is.


The cash is still there, the people are on the ground in the states, and at the higher levels e.g Thiel and co. Execution is what matters long term, not share price. The problem for Xero now is getting more US customers. We've seen them grow customers and revenue over the last few years in other regions so we know they have a plan here.

It's a businesses with ~200 000 customers, mostly in NZ. Intuit has a history and plan for fending off pesky intruders:

http://www.businessspectator.com.au/news/2013/10/18/technology/intuits-quickbooks-primes-aussie-assault



Your assumption is that they can't possibly get enough customers in the US. It looks like others disagree :) Evidence shows they can build a good product and they are responsive to customers - hence the 'cult' like following. Can they execute in the US? They are well placed to do so, as a small growing company with big dreams tied to good execution. Is there risk? Hell yeah. Are we playing tiddlywinks? Hell no.

The market assumption is that they have already succeeded in the US. I disagree with that based on no uptake in the US and unfavourable product comparisons:

QuickBooks Online is much more of an industrial strength product than Xero for example.

http://boxfreeit.com.au/2013/10/03/review-the-new-look-quickbooks-online/

Prepare for a hard landing in due time.

[Longhaul]

If I didnt like a stock I would just ignore it and spend my time elsewhere instead of trying to convince all the VERY HAPPY holders that the apocalypse is coming.

Completely agree with you here Ginger_steps. Honestly, it sounds like Intuit employees are on here trying to talk Intuit up and Xero down. It's hard to work out what would motivate someone to keep going on and on and on about it otherwise.

[Casino]

I just shared what I found in a few hours of research because there was very little substance here. Since you guys know the product, the market, the competition, etc inside out, I must trust your judgment. Actually you should use your insight to your advantage and start betting your houses on this bargain of a company. Most likely, you will multiply your fortune. Disc. - I have no vested interested in you loosing your houses.

[flipbot]

Completely agree with you here Ginger_steps. Honestly, it sounds like Intuit employees are on here trying to talk Intuit up and Xero down. It's hard to work out what would motivate someone to keep going on and on and on about it otherwise.

I concur. Say your piece and be done with it, rather that bleating on as if you are on a crusade to save the poor misinformed investors. Motives are certainly unclear.

[Lost in space]

I just shared what I found in a few hours of research because there was very little substance here. Since you guys know the product, the market, the competition, etc inside out, I must trust your judgment. Actually you should use your insight to your advantage and start betting your houses on this bargain of a company. Most likely, you will multiply your fortune. Disc. - I have no vested interested in you loosing your houses.

I mean, really. That is such a nonsensical post. Who, pray me, is talking about "betting their houses"? Your polar talk is nonsense.

I would suggest to other posters that we just ignore your posts and from now on don't give the feedback and response that you so eagerly require...

[Casino]

I mean, really. That is such a nonsensical post. Who, pray me, is talking about "betting their houses"? Your polar talk is nonsense.

I would suggest to other posters that we just ignore your posts and from now on don't give the feedback and response that you so eagerly require...

The movement has spoken. Don't worry. I will go back to reading threads that are informative in regards to the company, not just the human psyche for a while.

[Toasty]

I would suggest to other posters that we just ignore your posts and from now on don't give the feedback and response that you so eagerly require...

Way ahead of you.

[JamesST]

It's for weirdos. Just go on their Facebook page and look how people respond to the late release of POs. Demanding customers, which is the norm on the planet, don't react like that.

Ha - Yes this isn't the norm. Xero's customers (and I am one of them) appreciate their engagement and responsiveness. Do you think that putting the customer first and the resulting cult following is a bad thing for a company? For me it is the number one reason I am a customer and a shareholder.

[In4a$]

Ha - Yes this isn't the norm. Xero's customers (and I am one of them) appreciate their engagement and responsiveness. Do you think that putting the customer first and the resulting cult following is a bad thing for a company? For me it is the number one reason I am a customer and a shareholder.
I have to agree. I Know a few friends who use Xero and I have seen it used. They like it and I liked it so I brought shares. Long term I think it will do very well. It's a really good product. I am a holder

[blobbles]

Way ahead of you.

I would suggest to you both that purposefully ignoring dissenting views is both dangerous and foolish. Wilful ignorance is not something you should strive for, open mindedness is, particularly when investing. If you look at the NZX 50 graph for the past year you will see an upward trajectory of pretty epic proportions. That will not go on forever, meaning at some point SPs will drop. It is more likely that shares that do not have a price which is based on fundamentals will drop the most, that is what history tells us at least.

I am a former XRO holder that got out with a damn good profit once I thought it was getting overpriced and am happy to have done so. I would never wish anyone to lose money and am not sour about not being in now as it would stress me out seeing my past 10k shares going up and down based on very little. I used the profit from XRO to make money elsewhere, not as much as they would currently be worth sure, but at least I am less stressed as their prices are at least close to fundamental value.

Act cautiously when hype overtakes fundamentals. And be very afraid if your reaction to dissenting views is to ignore them. Casino's fundamental valuation is very close to mine for Xero and over time, shares generally go back to their fundamental value.

[Longhaul]

Bobbles, what are the assumptions you base Xero's fundamental value on? I wonder how they compare with those of Credit Suisse?

*Edit - the reason I ask is because all of us would agree that the current price doesn't align with the present situation, rather it reflects the potential that many investors around the world (not least of all the wealthy and well-known backers) see in one year, two years, three years time etc. If Xero hits 1 million customers what will be its fundamental value? What happens if (and big if of course) if it hits 10 million customers?

I also recall some mention that a significant proportion of Xero customers have not used or owned accounting software before - effectively opening up a new segment of the market - so they may not need to steal customers away from the competition to grow. (sorry I don't have a link to back that up, maybe someone else does).

[Toasty]

I would suggest to you both that purposefully ignoring dissenting views is both dangerous and foolish. Wilful ignorance is not something you should strive for, open mindedness is, particularly when investing. If you look at the NZX 50 graph for the past year you will see an upward trajectory of pretty epic proportions. That will not go on forever, meaning at some point SPs will drop. It is more likely that shares that do not have a price which is based on fundamentals will drop the most, that is what history tells us at least.

I am a former XRO holder that got out with a damn good profit once I thought it was getting overpriced and am happy to have done so. I would never wish anyone to lose money and am not sour about not being in now as it would stress me out seeing my past 10k shares going up and down based on very little. I used the profit from XRO to make money elsewhere, not as much as they would currently be worth sure, but at least I am less stressed as their prices are at least close to fundamental value.

Act cautiously when hype overtakes fundamentals. And be very afraid if your reaction to dissenting views is to ignore them. Casino's fundamental valuation is very close to mine for Xero and over time, shares generally go back to their fundamental value.

I have no problem with their views, just the way they are presented. And I also resent the accusation of ramping that was made a few pages back. I would also like these posters to confirm their evidence that lies have been told by the Xero management, also made a few pages back.

On the contrary I take every view into consideration and as I have mentioned a few times my investing success rate as gone up exponentially since becoming part of this forum as there is the opportunity to engage with people in the investing community that are few and far between in my off line life.

If you read back over the tone of the posts that I am not happy with, you will see that though they contain useful views, facts and figures they are also confrontational, belligerent and argumentative. These guys are just stirring for the sake of it disguised as concern for the well being of supposedly uninformed investors being taken advantage of by the Sharetrader community.

[biker]

In my experience (and that is apparently a lot less than some of the recent posters on this thread), stocks that continue to be priced for perfection, very rarely obtain it.
Just saying.....

[apac]

I don't understand why people who's gained a lot of money from Xero would get out completely. Its SP certainly looks like it has a lot of potential, regardless of whether it's based on hype or not.

The whole point of investing is to take some risks for some gain. If you have made money from Xero, why not take your capital back (plus interest if you borrowed), plus some more to spend, and leave the rest. Those are "free" shares. You would only be risking what you didn't have if you didn't invest. Since you invested, got your money back, and some more, it shouldn't matter losing what you didn't have. You've already made gains on your initial investment.

There's no guarantees in investments, for most investors, not losing money is a pretty good result, far too many people don't buy shares because of the fear of losing money, so the "risk" of losing what you made should not be a big deal, but the "risk" can also result in big gains.

This is my investment strategy anyway. "Risk free" investments are the best!

[apac]

Apologies for my ignorance.

Do we have an example of a SaaS company that's gone up dramatically since IPO and subsequently went out of business? Or that the share price has tumbled by say more than 50% and hasn't recovered?

[blobbles]

Bobbles, what are the assumptions you base Xero's fundamental value on? I wonder how they compare with those of Credit Suisse?

*Edit - the reason I ask is because all of us would agree that the current price doesn't align with the present situation, rather it reflects the potential that many investors around the world (not least of all the wealthy and well-known backers) see in one year, two years, three years time etc. If Xero hits 1 million customers what will be its fundamental value? What happens if (and big if of course) if it hits 10 million customers?

I also recall some mention that a significant proportion of Xero customers have not used or owned accounting software before - effectively opening up a new segment of the market - so they may not need to steal customers away from the competition to grow. (sorry I don't have a link to back that up, maybe someone else does).

I base mine on forward looking value of revenue and growth, but with a healthy dose of risk in XRO's case because it is going up against some serious incumbents. While they currently have the edge in both methodology, design and customer satisfaction, it may not remain that way over the course of the next 3-4 years, which is where I put the current SP at. Current value = $8.20, if they maintain 100% customer growth overall (i.e. not just 100% in the USA). They only get to the current SP 3-4 years down the track on my valuation, which means they have to maintain that customer growth for that long.... I really really really hope they can do it as it would be fabulous for NZ, both as a lot of shareholders are based here and also because it would be awesome for our economy (and I could end up working for them as an IT guy!). But that represents a lot of risk.

You admit that the price represents a future price and don't see any risk in that? That is the definition of not sticking to fundamentals.

I would NOT trust Credit Suisse's valuation as the number of times they (and other big finance/brokerage outfits) have been completely wrong on valuations is rather high. And I believe that they are incorrect BY DESIGN, i.e. I think that brokerage firms that release public reports on values are the biggest pump and dumpers in the industry. Why would you release a report that indicates a higher than current price, when you could make a lot of money by picking the shares up at a lower price and awaiting the price to get where you think it will go? Frankly it does not make sense to me... if I see an undervalued share I do one of two things: I buy it and sometimes out of altruism will share valuations with others. Or, if I am feeling greedy, I won't tell anyone about it and just keep picking them up at a lower price. I wonder... are international finance companies likely to exhibit altruism or greed? DYOR - always and never rely on someone else to tell you what a price should be (as anyone that has been to an Asian/African market will tell you!).

[blobbles]

I have no problem with their views, just the way they are presented. And I also resent the accusation of ramping that was made a few pages back. I would also like these posters to confirm their evidence that lies have been told by the Xero management, also made a few pages back.

On the contrary I take every view into consideration and as I have mentioned a few times my investing success rate as gone up exponentially since becoming part of this forum as there is the opportunity to engage with people in the investing community that are few and far between in my off line life.

If you read back over the tone of the posts that I am not happy with, you will see that though they contain useful views, facts and figures they are also confrontational, belligerent and argumentative. These guys are just stirring for the sake of it disguised as concern for the well being of supposedly uninformed investors being taken advantage of by the Sharetrader community.

Agree, yellow card people for offences such as ramping (up/down) and slander based on zero evidence. Casino definitely be yellow carded for suggesting XRO are about to make up customer numbers.

But don't turn your ignore on for users who may have a point :)

[blobbles]

I don't understand why people who's gained a lot of money from Xero would get out completely. Its SP certainly looks like it has a lot of potential, regardless of whether it's based on hype or not.

The whole point of investing is to take some risks for some gain. If you have made money from Xero, why not take your capital back (plus interest if you borrowed), plus some more to spend, and leave the rest. Those are "free" shares. You would only be risking what you didn't have if you didn't invest. Since you invested, got your money back, and some more, it shouldn't matter losing what you didn't have. You've already made gains on your initial investment.

There's no guarantees in investments, for most investors, not losing money is a pretty good result, far too many people don't buy shares because of the fear of losing money, so the "risk" of losing what you made should not be a big deal, but the "risk" can also result in big gains.

This is my investment strategy anyway. "Risk free" investments are the best!

It depends on your life as well, when I got out of XRO I was going through some life changing circumstances that meant I had to have money on hand and I also had to decrease the riskiness of my assets. While, looking back on it, I didn't actually need to get rid of all of my shares and probably shouldn't have, I don't regret it because if I had to make the same decisions based on the same evidence, I would make the same choice. As I still made a lot of money, I can't be upset about it!

I like your investment strategy and it is also mine. Hence I like to invest more in things that are actually giving a return now and are looking positive for the future also, giving both dividends and the chance for capital growth.

[Toasty]

But don't turn your ignore on for users who may have a point :)

I'm still reading. Forum has been too good to move away from. I always appreciate your posts.

[blobbles]

Apologies for my ignorance.

Do we have an example of a SaaS company that's gone up dramatically since IPO and subsequently went out of business? Or that the share price has tumbled by say more than 50% and hasn't recovered?

How many examples do you want? In my view you should not think of SaaS companies being dramatically different and therefore worth more than normal companies. Everyone did EXACTLY the same thing in 1999 just before the great .com crash. While they may have a scale advantage which could (in theory) gain them more customers for lower cost than traditional businesses, in my view market forces will always take over (i.e. competition) which will reduce the advantage of said scale. This also from an IT guy that understands how the SaaS business works at a detailed level :) What that means for XRO is that while they maybe best of breed etc currently, eventual profit figures from the market if everyone switches to them, will likely be in line with or lower than Intuits. As technology marches on, it tends to make services cheaper along with productivity gains, not returning more profits to the companies producing them, unless they exhibit monopolistic behaviour or influence the market (I am looking at Microsoft, Apple and Google to some degree). Those 3 previous companies have either had a tightly held competitive edge, IP that they can protect or really good marketing. I don't see XRO having any of these, hence my advice - be cautious.

[winner69]

power outage in north island today, DB working on fixing bugs in regards to some stocks ask side, may be affecting trading a bit. just thought id let everyone know since we seem to congregate here now!

Did XRO work during the power outage

[Latama]

Did XRO work during the power outage

Yes. No problems as far as I was concerned.

[apac]

Also I don't think anyone has said they agree or disagree with my theory, that Peter Thiel et al would invest looking for more than double their investment. so $36 would be a very conservative value based on their investment.

I would say they would be looking for at least 3 times their money back, some would say even 5 to 10 times. So assuming they want 3 times their money back, and if all goes well, XRO should be worth $54 at some point.

And I don't think they would base their return on the best case scenario, so if XRO is very successful in US, it could be worth a lot more than $54.

There's too many variables that would affect future share price, but the expectation is that if XRO is successful, one day it will be worth a lot more than what it is now. Sure, it could be over-valued now, but compared to future SP, it could still be very cheap. No sensible investor would buy now if it's fully priced for future growth, because it means the SP could only go down from here, you would be better keeping your money in the bank, and still make interest. Which some would argue that's what you should do.

I expect if there's no bad news, XRO should be trading at $50+ at some point in the near future (think 3 to 6 months). When? I would have no idea. Will it go much higher? I would have no idea either. The previous high of $41.50 is not that far from $50. In the short term, it could go up to $50 and pull back, but it will happen!

[blackcap]

Also I don't think anyone has said they agree or disagree with my theory, that Peter Thiel et al would invest looking for more than double their investment. so $36 would be a very conservative value based on their investment.

I would say they would be looking for at least 3 times their money back, some would say even 5 to 10 times. So assuming they want 3 times their money back, and if all goes well, XRO should be worth $54 at some point.

And I don't think they would base their return on the best case scenario, so if XRO is very successful in US, it could be worth a lot more than $54.

There's too many variables that would affect future share price, but the expectation is that if XRO is successful, one day it will be worth a lot more than what it is now. Sure, it could be over-valued now, but compared to future SP, it could still be very cheap. No sensible investor would buy now if it's fully priced for future growth, because it means the SP could only go down from here, you would be better keeping your money in the bank, and still make interest. Which some would argue that's what you should do.

I expect if there's no bad news, XRO should be trading at $50+ at some point in the near future (think 3 to 6 months). When? I would have no idea. Will it go much higher? I would have no idea either. The previous high of $41.50 is not that far from $50. In the short term, it could go up to $50 and pull back, but it will happen!

What about the performance of XRO the company? Is that not important? Revenues, expenses and profits? EPS growth drives shareprices in the long run. All this talk of XRO share price will be higher therefore its a good price to buy now is quite scary :)

[apac]

What about the performance of XRO the company? Is that not important? Revenues, expenses and profits? EPS growth drives shareprices in the long run. All this talk of XRO share price will be higher therefore its a good price to buy now is quite scary :)

Revenue is low, expenses are high, there's no profit, but that's now, not future.

XRO the company is expected to turn a profit at some stage, otherwise the SP definitely won't be justified and Peter Thiel wouldn't buy at $18.15. Would he be privileged to insider information? Like detailed strategy, pricing, forecasts etc for the next 5 years or something? If he is, then his calculations would be a lot more accurate than calculations based on public information, and we can only trust or not trust that they've made a good call based on the information they have.

[Harvey Specter]

I would say they would be looking for at least 3 times their money back, some would say even 5 to 10 times.If you assume that, then you should also assume a 1/10 chance of that happening, a 4/10 chance of going to zero and a 5/10 chance of only returning your investment (or normal returns - 10%pa). That is standard VC type expectations.

Edit: with specific numbers from NZVIF - Theil may have a better track record of picking winners ;)


According to the New Zealand Venture Investment Fund, it may be considered that, in general terms, for every ten investments made, four may be expected to fail; three may ‘tread water’ (ie.g likely to continue to trade but without material growth in value); two may return two-to-five times the initial investment; and one may result in a return of five-to-ten times the original investment over a five-to-ten year period.
(Source: www.nzvif.co.nz/seed-angel-investors.html)

[apac]

If you assume that, then you should also assume a 1/10 chance of that happening, a 4/10 chance of going to zero and a 5/10 chance of only returning your investment (or normal returns - 10%pa). That is standard VC type expectations.

That's good information to know. thanks

[blobbles]

Also I don't think anyone has said they agree or disagree with my theory, that Peter Thiel et al would invest looking for more than double their investment. so $36 would be a very conservative value based on their investment.

I would say they would be looking for at least 3 times their money back, some would say even 5 to 10 times. So assuming they want 3 times their money back, and if all goes well, XRO should be worth $54 at some point.

And I don't think they would base their return on the best case scenario, so if XRO is very successful in US, it could be worth a lot more than $54.

There's too many variables that would affect future share price, but the expectation is that if XRO is successful, one day it will be worth a lot more than what it is now. Sure, it could be over-valued now, but compared to future SP, it could still be very cheap. No sensible investor would buy now if it's fully priced for future growth, because it means the SP could only go down from here, you would be better keeping your money in the bank, and still make interest. Which some would argue that's what you should do.

I expect if there's no bad news, XRO should be trading at $50+ at some point in the near future (think 3 to 6 months). When? I would have no idea. Will it go much higher? I would have no idea either. The previous high of $41.50 is not that far from $50. In the short term, it could go up to $50 and pull back, but it will happen!

I like your confidence :)

But my risk averse mind and as a student of history, your confidence maybe misplaced and you should also keep that in mind. Peter Thiel is someone who can spot future trends early and has a very risky nature - throwing himself into things like PayPal/Facebook etc very successfully. But these sorts of people also sometimes fail and are also out for themselves... you will note he dumped a hell of a lot of facebook shares when he realised Facebook had had its run... which shows you he won't support a business if he thinks the market is somewhere close to stalemate or has limited growth/earnings potential.

[Shore]

you will note he dumped a hell of a lot of facebook shares when he realised Facebook had had its run... which shows you he won't support a business if he thinks the market is somewhere close to stalemate or has limited growth/earnings potential.

Wouldn't you? This is the whole reasoning behind Xero's stellar run and its soaring valuation - the fact that there is a lot of belief that there is a huge opportunity in the marketplace for Xero with a lot of room for growth, potentially for years and years to come.

Of course, when Xero starts to achieve saturation in the marketplace and running out of room for growth prospects (like Google etc has settled into a more predictable & established pattern) then of course the stock will correct itself. But that day is a long, long, long way off. Xero still a baby in terms of its potential... so it's far too early to be writing it off just yet as a few are very keen to do.

[Snow Leopard]

So:

for $33.35 I would get something so limited it could not cope with the my personal finances

for $56.35 I would get something that does not do multi-currency?

so I would need to spend $73.60 (I can not reclaim the GST) EVERY MONTH to do the accounts for one company?

Is it worth even signing up for the free trial?

Best Wishes
Paper Tiger

[Harvey Specter]

for $56.35 I would get something that does not do multi-currency?One of the business I am involved with his happy paying $19 for this version as they can claim GST and don't need multicurrency.

Another company I am involved with is happy paying millions to SAP. And even then, we have add on modules from other suppliers just like XRO has.

[JamesST]

I bought sub $1 and certainly didn't expect the SP to be where it is today. I personally wouldn't buy at today's price however I'm not selling despite now being poorly diversified. You'd think that if I wasn't willing to buy at this price I should sell. I do think that the price is too high on fundamentals but I also believe it will be much higher in the long term.
I'm treating it as I do my own company. I wouldn't sell now just because someone offers me a high price based on today's revenue - because I have a vision of where the company will be. I feel the same way with Xero.
I don't care if the SP drops significantly in the short term. Perhaps some recent buyers may have an unrealistic time-frame on how quickly customers will grow in the US and get cold feet if it takes a little longer. In fact a drop would allow me to buy some more of the company.
I'm patient. I've enjoyed being a shareholder and customer for about 6 years and have been impressed with their excellent execution. 6 years of exceeding my expectations builds a lot of trust. I feel like my investment is much less risky than it was 6 years ago even taking in to account its vastly different value.
The UK took a long time to build momentum but they seem to have reached a tipping point. The US is further behind but they have the benefit of a much more mature product, experience and bigger team this time around.
I'm pumped. Bring on the next 6 years.