Xero says share price surge reflects upbeat press

 Xero, whose shares soared 333 percent in 2013, has put down a rising share price to positive press, a growing brand in the US and high volatility from being closely held after getting a 'please explain' notice from the stock market regulator.

The share market supervisor questioned a 42 percent gain in the Xero share price from Dec. 5 to Jan. 16, since the last price sensitive announcement was made in late November. The shares fell 2 percent to $41.51 today, having reached a new intraday high of $43.30 earlier in the session.

Xero chief financial officer Ross Jenkins responded by saying the Wellington-based company continues to meet continuous disclosure rules, and that it was on track to meet its forecast sales growth of 80 percent in the 2014 financial year.

"We note that the Xero share price has a history of high volatility as a result of a relatively tightly held register," Jenkins said in a letter to NZX's market surveillance unit. "We also note that we have seen an increased awareness of Xero in the US (particularly following Xero's capital raise of NZ$180m in October 2013), and that Xero has been the subject of recent positive media attention in Australia, New Zealand and the US."

In July last year the company responded to a price inquiry by putting it down to its tightly held register creating volatility. As at May 10 last year, 54 of Xero's 4,715 shareholders held 83.7 percent of the company, according to its 2013 annual report.

Chief executive Rod Drury is the biggest shareholder with a 17 percent stake, followed by MYOB founder Craig Winkler with 15.7 percent, according to recent substantial shareholder notices.

The company yesterday appointed Chorus sales and market general manager Victoria Crone as its New Zealand managing director, effective from April.

(BusinessDesk)

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Well - there are 5 partners in my practice, making it tightly held - maybe I can use that to actively talk up and manage the share price of my company!!!

When will the NZX start ENFORCING its rules - Xero responds to its share price enquiry by saying there is no material information outstanding, and then immediately after provides forward revenue guidance, and then does what it always does and offers commentary meant to manage its share price (ie, provides subjective reasons for why its share price is high, like a tight register, which in fact isn't meaningful because markets function where normal share investors have a set dollar amount they can purchase, and seek to. Normal investors dont demand to buy a certain # of shares at a certain share price, they have a set amount of capital they can invest). Xero has about as many or more shareholders than other companies on the NZX anyway - so if they are going to make these claims they should back them up.

But the CFO and the company should get out of the business of share price management and stop being so cosy with the media.

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Jeez, the criticism of Xero grows ever more bizarre. But I suppose we should expect that the higher the share price goes, the louder the whining from those who don't own shares.

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spot on Pete these whingers who have been bagging Xero since day one can't stop

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I found the volatility comment interesting too. Went back and calculated the vol over the last 5 years - ranges between 30% and 40% annualised and only spikes more recently to above 50% ... Still the CFO isnt exactly going to come out and say - hey we're in a bubble, our share price has climbed due to irrational exuberance...

I've said it before and I'll say it again, the most fizzy of the fizzy stocks were only ever invested in at max 15-20 x revenue (eg Facebook). Xero at 80 - 160x revenue depending on prospective/historic revenue is just stupid.

From a 90c SPP investor along for the ride

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I think the point is fair though that when responding the a market commentator Xero should have just done what other companies would have and said "No, we are not aware of any information" and left it there, rather than saying that and then talking again about forward guidance and offering subjective (and debatable) views on the nature of its share register and market press.

It's that sort of stuff that leaves many to question Xero's management.

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