Strange.. I just got a strong wiff of tulips..
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Strange.. I just got a strong wiff of tulips..
Its whiff, and it might be poppies
Quick answer: 28% ;)
Long answer: depends on how they structure their overseas operations and where they locate the IP.
The risk is that XRO could relocate their IP to a low tax jurisdiction. The CFC rules should catch this. But what if XRO gets taken over and the whole company moves overseas. Then all the revenue is lost.
The Government does support - it has receive millions in R&D grants that dont need to be repaid even if sold overseas. Read up on Endace on the NBR for the debate/argument between Selwyn and Joyce.
Rods made enough noise about it being a Kiwi company taking on the world etc that it would be a pretty tough sell to relocate for tax purposes. I would like to think they will stick by that stance and pay their tax here.
First step to paying tax is to have a (taxable) profit, something that has (deliberately) eluded Xero so far. They have over $35m of tax losses carried forward per their last stat accounts.
They are many years away from paying income tax. Lots of PAYE though, based on all those high paid employees in wellington.
Thanks for your insights Turmeric. Our differences clearly lie in the different way we approach the question ... "why should I invest in this (or any other) company". Whereas you appear to make your decision to invest relying heavily on the fundamentals of a firm, I tend to "check" (& keep checking) the fundamentals, but rely more on Technical Analysis. My questions (& comments) therefore are formed from a technical viewpoint. In that regard, all I was trying to say is that "in my opinion" the technicals in XRO do not in any way justify a SP of $10.00 (& rising by about 50c a day!). I have still not had that answered apart from some who say it is based on what may happen in the future. In that regard then, if the future happens to pan out the way they are hoping, then does that mean the SP will climb even further ... given it has already supposedly been priced in now? This is where I have difficulty understanding.
I very much am invested in PEB - for both fundamental and technical reasons and am happy to be there - for now.
Far out, this is pretty much going up in a straight line now.
I've decided to change my mind and declare it undervalued. We are clearly in a "new paradigm" and I'm quite sure "this time is different".
Given the number of eyeballs that look at Xero, and compared to the number of eyeballs that look at other things in other places, I conclude that Xero is trading at a reasonably low Price/Eyeballs ratio and is therefore undervalued.
Crack out the old Prince records. Let's party like it's 1999.