Xero chief executive Rod Drury. Photo by The NZ Herald.
Profitless cloud computing business Xero became New
Zealand's fourth-largest listed company yesterday, when its
shares spiked to $33.15 each, valuing the company at $4.23
The rising value of shares in Xero, which was the
top-performing New Zealand stock during the past year,
continues to defy logic, rising about 10% at one point
yesterday, Craigs Investment Partners broker Peter McIntyre
''They're up 10% on no news. We can't see what's driving it.
It's beyond logic,'' he said.
About 480,000 shares had changed hands by 2pm yesterday,
through 530 mainly small transactions, with the largest buyer
taking 50,000 shares.
The number of daily trades was ''on par'' for the month high
and low of respectively 800,000 shares and 292,000 shares, Mr
Xero shares opened at $30.10 yesterday and closed at $33.15.
Xero has not posted a profit in five years, booking revenue
of $39 million for the year to March and a net loss of $14.4
million for the period.
Forsyth Barr broker Haley Van Leeuwen also noted there was
''nothing new'' to cause the latest spike above $30 per
''Xero's caught the eye of investors domestically and
internationally. There is a lot of momentum behind this
stock, with a significant increase in trading volume seen
over the last two weeks, especially after the capital-raising
announcement,'' Ms Van Leeuwen said.
The company's announcement last month said it had raised $180
million of capital from high-profile investors, including
Facebook billionaire Peter Thiel, sparked a major stock
rally, The New Zealand Herald reported.
Ms Van Leeuwen said in Xero's latest quarterly report it had
recorded increasing levels of investment in software and
premise development in the United States.
''Investors seem to be wanting to get on board now before any
future announcements are made,'' she said.
At $4.23 billion, Xero was well behind Fletcher Building's
market capitalisation of $6.67 billion, but within reach of
Auckland International Airport at $4.64 billion and Telecom's
$4.25 billion; but the $33.15 close left Xero fourth, just
Xero's meteoric share price rise of more than 480%, from
$5.40 a year ago has not been without volatility; it was only
in mid-July the NZX issued a ''please explain'' when its
market capitalisation dipped by $400 million, from its then
$18 per share, $2 billion market capitalisation.