Xero shares recover
Listed technology stock Xero is up 12 cents today as it continues to recover losses of the past two weeks.
Listed technology stock Xero (NZX: XRO) is up 12 cents today as it continues to recover losses of the past two weeks.
But analysts say the upward movement is more about natural volatility than a show of investor confidence after a run-in with NZX Market Supervision and two botched share sale disclosures.
Xero's plummeting share price, from $5.21 on August 15 to $4.71 less than two weeks later, prompted a "please explain" from the NZX Markets Supervision last Monday.
The company responded it was compliant with all market rules – and then disclosed chief operating officer Alastair Grigg sold 124,500 shares earlier in the month, raising questions of a possible Securities Markets Act breach.
On Thursday the company admitted another share sale mistake, this time involving former director Philip Norman.
On Friday, the Wellington-based, cloud-based accounting platform provider went on a PR offensive, saying it had doubled its employees in the calendar year and is seeking 100 more new staff.
The stock has rebounded from last week's low of $4.32 to $4.91 today.
NBR ONLINE asked two analysts if the share price rebound meant the market was showing confidence in the company's response to NZXMS. Both put the stock's rebound down to natural volatility.
Forsyth Barr analyst Andrew Harvey-Green says Xero's share price fluctuations over the last few weeks have been more dramatic than usual.
"It was a surprise for it to get so high in the first place. Exactly what's driving the movements in the share price is particularly difficult to get behind."
Grant Williamson, a director at broking firm Hamilton Hindin Greene, says when the market gets nervous investors are quick to take profits on such high-flying stocks because there is so much profit to take.
"It's a company which investors believe has a lot of blue sky – their product is extremely well-accepted almost worldwide now.
"We need to bear in mind that the market has valued this company at such high multiples that the company is going to have to start to increase revenues and profitability in a pretty serious manner to warrant the share price remaining around the $5 mark."
Xero's share price hit $5.05 this morning, before dropping back to $4.91. The stock started the year at $2.76.
David Williams
Mon, 03 Sep 2012
Mon, 03 Sep 2012
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Xero shares recover
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