Beacuse if Xero needs more money, the market price will correct to whatever the sophisticated investor that is putting new capital into Xero is prepared to pay.
SNOOPY
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I'm back in today, but a bit concerned that there was no bounce late arvo. It may yet drop to test 1990 / 2000. Unusual intrday patterns on this stock. Earlier this week, after dropping through 2300, it recovered late arvo to close at its highest for the day at 2322. That was bullish and yet the following day immediately dropped through 2300 again and continued to fall.
And yet, when the sp climbs, it rockets with good liquidity. If it doesn't bounce Monday, I'll buy a second parcel to average down somewhere around 1900 if it gets that low. Bounce it will...early next week almost certainly.
BC
Yeah screamers are always good (poker face)
Snapster please clear you inbox.
Here comes that $18 price point all the punters are after.. I said to myself it was going to happen but honestly didn't think it would. Xero is tanking so hard.
Star date August 15th 2019 Xro shares hit $100 who'd have thought back then in the dark ages of 2014:cool:
People come on take your blinkers off, Every bubble eventually bursts. Just because it was more expensive yesterday doesn't mean its cheap today. Xero is valued at ridiculous multiples are measurements. Xero, wyn etc will be ALOT cheaper in the near future. may be 6 months or 12 but wont sustain this. Seen it so many times and im probably younger than everyone here. once a negative net income growth company starts making profit, they start becoming valued from it, which is obviously a hell of a lot less than the dizzy heights most companies are valued on from revenue during major growth period.
think about it this way - if your not holding would you buy more if you were, and if your holding would you buy if you weren't.
Reading this article one wouldn't be that confident of making any money on XRO if you paid $20 today
http://www.nbr.co.nz/article/xero-sh...lans-bd-160945
Just a but -
"The Xero stuff just gets more bearish, all it looks like they've done is gone in and poke the giant that's Intuit and it's turned out they haven't managed to grab a first mover advantage in the market because their product wasn't ready for market in terms of the Xero product," Harrison said. "They've woken up Intuit and it's responded with a product that is."
So the believers still need to believe .........others?
I don't disagree with that, and I thought my original post implied that, so perhaps I had better rephrase what I said.
I had referred to the push out of the cashflow breakeven point, due to slower than anticipated take up of the Xero product. In the short term this will have a negative effect of the present day discounted cashflow valuation.
One could argue that if the development path is still on track, and because there is such a high positive value to future growth, including the ten year plus 'mature growth' phase of the discounted cashflow model, then the long term value of Xero will not be affected.
However Xero is not being developed in a vacuum. Delays in the product development for the US market will result in the relative attractiveness of Xero being diminished, simply because competitors will have had more time to sharpen up their own offerings. This will apply even if the ultimate design form of Xero is not changed from what Rod Drury conceived. It is actually the lower medium term growth of the company that will have the bigger effect on the present day value of Xero, IMO.
It is the short term effect that is very influential on the long term shadow. Both short and long term cashflow effects will be weighing on the present value of Xero.
SNOOPY
The million dollar question with all IT tech start-ups is, ‘what will the customer uptake rate actually be’.
I personally don’t invest in them simply because I’m a long term investor and the sensitivity analysis on customer uptake is usually too extreme to allow for a two year horizon to be sufficiently predictive in a sector where companies don’t typically have high value patents or other entrenching predicators. They don’t necessarily fit the tax free incentivised investment opportunity model we are blessed with here in NZ all that well.
But for a short term tax paying investor, what that DCF analysis does is allow them to predict short term (3 to 6 month) moves. If the company issued outlook for customer numbers alters, either up or down, the SP will re-rate to the next DCF run, particularly in the case of XRO which I suspect is quite well modelled by offshore analysts.
That’s not to say that very short traders (weeks) won’t overshoot DCF valuations and swing it around as they do, but I’m sure there are probably some who do quite well from it for their efforts.