Thursday, October 16, 2014

Xero's US Investors Wince As Share Price Slumps And Growth Slows / "analysts who cover Xero are all unanimous in putting a sell rating on Xero stock"

Ben Kepes for Forbes writes: (Note, all values in the following article are set in New Zealand dollars since Xero is listed on the New Zealand stock exchange and reports in its home currency)

When high-profile investors Peter Thiel and Matrix Capital Management pumped close to $150 million into listed cloud accounting vendor Xero a year ago, it sent the share price soaring. The shares were purchased at $18.15 and hit over $45.00 earlier this year, valuing the company at close to $6 billion. Not bad for a company that started outside of the US, and hasn’t really put the pedal down in terms of US market entry.
After its latest operating update however, those investors must be wondering about their investment. In the past year Xero has lost a US CEO after high profile hire Peter Karpas was hired with much fanfare in February, only to part ways with the company six months later. Xero’s US president Jamie Sutherland is still there, but has been relegated in role if not in title after both the appointment of Karpas and then the stepping in of CFO Ross Jenkins to act as temporary CEO after Karpas quit. The share price has reverted back to less than what investors paid for their holdings 12 months ago (see chart below).  [snip].