XRO
The problem for Xero (XRO) is that it is an 8-9x price-sales company…
…that is currently loss-making, at a time when investment grade credit pays you c6% and government bonds 4%.
Yes, they could “switch on the tap”, but they have not. And it is pretty competitive out there.
Not one for us, just now.
Tech stocks everywhere are getting crushed, and, to a degree, this is to be expected, given the repricing of the risk free rate.
If all of the FANGMAN stocks have downgraded and IRE, REA, and DHG have all downgraded (and they did, growing “less fast” even if “still fast” is a d/g relative to market expectations), it’s not especially surprising that XRO does too, as it simply points a slowdown in the decision making process (which here, for XRO, might be switching to their services, to cloud accounting in general) and also likely rising costs to grow the business in the US.
The CEO turning over likely doesn’t help near term sentiment either.
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