Xero shares rebound; Drury seizes chance to lobby IRD Commissioner

UPDATE May 3: Xero shares have rebounded after heavy losses Wednesday (-11%) and Thursday (-13.53%).

The stock [NZX:XRO] closed up 5.60% to $13.20.

Buyers seemed to have been attracted by the recent pull-back; there was no major news relating to the company.

Meanwhile, Xero CEO Rod Drury has managed to button-hole IRD Commissioner Naomi Ferguson.

Mr Drury told NBR ONLINE the pair bumped into each other at an event in Wellington last night. It was an informal conversation, but provided an opportunity to go over points he raised in an opinion piece on the agency's controversial $1.5 billion software upgrade project (read Dear IRD: how to shave $1b from your $1.5b software spendup).

"We had a good chat about the issues.She gets it," Mr Drury said.

Xero shares tumble for second day

May 2: Xero shares [NZX:XRO], which slipped 11% to $13.30 yesterday, were down 13.53% to $11.80 in midday trading today. [UPDATE: the stock recovered some ground to recover to close down 6.02% at $12.50].

The tumble comes after a recent run up.

The fall over the past two days - which, given the lack news, seems driven by profit-taking - takes Xero's market cap down to $1.35 billion from its recent high of $1.7 billion.

"We don't set the share price. It's not something we focus on," Xero CEO Rod Dury told NBR Online late morning.

"We are aware of overseas investors building positions over the last few months and assume they are now where they want to be."

After Xero's April 5 update to the NZX for the year to March 31 (below), Forsyth Barr hiked its 12-month price target from $6.35 to $12.50.

But the broker assessed the stock as "speculative" and retained its hold rating.

Is the dip a (partial) return to valuation sanit, or a buying opportunity?

The endless debate will contine.

XERO: 12 months to March 31, 2013

Bottom line: $15 million loss (year-ago: $7.9 million loss)
Revenue: $39 million (year-ago: $19.4 million)
Cash: $71 million (year ago: $38 million)
Paying customers: 157,000** (year ago: 78,000)
Staff: 382 (year ago: 174)
Market cap: $1.52 billion

* All figures from April 5 NZX update for 12 months to March 31, 2013. The update forcasts a full-year loss "under $15 million." The update says monthly subscriptions are now at a rate that implies $51.5 million annual revenue.

** NZ: 73,000 (year: ago: 47,000; +55%)
Australia: 51,000 (16,000; +219%)
UK: 22,000 (11,000; +100%)
US/global: 11,000 (4,000; +175%)