Friday, August 15, 2014

Xero share tumble - Drury doesn't know why

Summary Xero shares appear in danger of slipping below $20 after a brief boost provided by a defiant presentation by chief executive Rod Drury at the company's annual meeting wore off. Shares in the cloud software firm were trading down 6 per cent at $20.21 in late morning trading after touching an intraday low of $20.16. At the company's annual meeting last month, Drury forecast Xero would grow its subscription revenue by "approximately 80 per cent" in constant currency terms in the year to March 2015 and signalled its desire to float on a United States exchange in 2015.
Hamish Fletcher for the New Zealand Herald writes: Xero's share price has tumbled by about 15 per cent this week but chief executive Rod Drury says the "business is firing" and he doesn't know what is behind the drop.

Shares in the cloud accounting software company were down 6.28 per cent shortly after 1.30pm and trading at $20.15 each.
This is less than half the record price of $44.98 which Xero shares hit in March.
Drury did not know why the shares were falling and said he had just returned from San Francisco where he got good feedback about Xero's growth forecasts.
The company is forecasting subscription revenue growth of 80 per cent for this financial year, Drury said at the company's annual meeting last month.
Rickey Ward, JBWere's New Zealand equity manager, said the drop in Xero's share price was difficult to explain.
But he has one possible theory that relates to the company's $180 million capital raising last October.
New shares issued in the capital raising are restricted from being sold until October this year.
Ward said there could be a fear among Xero shareholders that investors involved in the capital raising - who included early Facebook investor Peter Thiel - might sell stock when the restriction is lifted, which could push Xero's share price even lower.
Forsyth Barr analyst Blair Galpin had not seen anything to explain why share price was cooling off and that the volume being traded was not huge.
"It's not a large number of shares trading for that price drop," he said.
"Nothing's changed in the Xero story," he said.
- with Christopher Adams


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