TOM PULLAR-STRECKER for Stuff.co.nz: Xero has brushed off a "please explain" letter from the NZX issued
in response to a 21.5 per cent drop in its share price between June 16
and this morning.
The software company noted that its shares had since added $2 and
said it was complying with its continuous disclosure obligations.
Shares in Xero slid from $29.31 to bottom out at $23 this morning
before recovering. The shares were trading at $24.83 this afternoon,
valuing the company at $3.2 billion.
It confirmed it would issue a revenue forecast for its 2015 financial year at its annual meeting next month.
Xero issued an update on June 16 that said its annualised monthly
revenues had increased from $93 million to $100m between March and May.
One analyst speculated that the increase may have been viewed by
investors as disappointing, and a subsequent decline in its share price
may have triggered panic selling by some retail investors.
Xero told the NZX its shares were subject to significant volatility because of its tightly held share register.
In March and April, there was a "substantial general rerating" of
cloud-software stocks, but Xero was confident in its growth strategy,
chief financial officer Ross Jenkins said.
Xero responds to price inquiry
AAP for Local Today writes: Xero has responded to a stock market operator price inquiry after the
New Zealand cloud-based accounting software firm fell to an eight-month
low in morning trade.
The NZ stock market regulator issued a
"please explain" notice to Xero over a 22 per cent, or $NZ6.31, decline
in its share price since June 16 to an eight-month low $NZ23 at 11am
(0900 AEST)on Tuesday.
The stock has "historically been subject to
significant volatility as a result of its tightly held share price,"
and Xero complies with continuous disclosure rules, the Wellington-based
firm's chief financial officer Ross Jenkins said in a letter to the
regulator.
"Since the $180 million capital raise at $18.15 in
October 2014, Xero's share price has been on a rapid upward trend, in
part driven by increased global investor exposure and the inclusion in
various large global indices," Mr Jenkins said.
"In March/April
this year, the market saw a substantial general re-rating of
software-as-a-service stocks, which impacted Xero's share price."
Xero pared its morning losses and was down 4.3 per cent to $NZ24.80 in early afternoon trading.
The
Wellington-based firm has fallen 46 per cent in the past three months,
from an intraday record of $NZ45.99 in early March, and was one of a
group of growth-orientated stocks under pressure on Tuesday.
Dunedin-based
biotech company Pacific Edge declined 6.2 per cent to an eight-month
low of NZ76 cents and has plunged 49 per cent in the past three months.
"All
the growth stocks continue to be chasing the same pool of investors
with all the new listings coming on the market as well," said Bryon
Burke, head of equities at Craigs Investment Partners.
"There are a
lot of growth stocks around and they seem to be losing favour at this
stage and there are more coming onto the market and that seems to be
where the money is heading, to the new ones."
Online business travel booking company Serko debuted on the NZX on Tuesday at $NZ1.10 before sliding nine per cent to $NZ1.
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