Lance posted over here about the fact that Xero’s share price has trended downwards since listing. Sorry Lance but the analysis is shortsighted and simplistic.

1) Volumes traded are miniscule – in the few thousands and as such, the price of trade is an aberration and not indicative of the shares true value

2) Xero always said that their’s was a long term play – the IPO was funding 2 or 3 years of development, and revenue would only be gained after a space of time. Obviously a few punters didn’t read the prospectus, or alternatively want to get their money out to go buy something else and it is this that is causing the abberratively low share price we’re currently seeing.

Sure Xero launched at $1.10 put post launch trading (for the first few days anyway) is always on the high side – thereafter it settles to a reasonable level while the market sees the worth (or otherwise) of the offering.

I agree Lance that now might be a good time to buy Xero shares, but don’t expect an upward trending share price any time soon – until the product and the business are proven there is no reason for the price to go up.

Burger Fuel and Xero, while having conveniently similar sized IPO offerings, are completely different models and any comparative analysis is doomed to failure.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

2 Comments
  • Footnote – If I were a Xero shareholder, I’d be quietly pleased that Rod and the team are keeping their heads down madly developing the product I gave them money to develop rather than wasting time commenting on share price movements

  • Falafulu Fisi |

    I think that with Xero’s hooking up CSI, I would expect that they (Xero) would come up with killer functionalities that were not seen before in Accounting software, even competitors such as MYOB & others. Here is a fact about human behavior. You’re loyal to a product, until something better comes up, then you abandon ship and jump. One clear example was Google. People never knew anything better in the late 1990s about web search engine apart from the duo-poly at the time (Microsoft & Yahoo). Then came along Google, and bang! The duo-poly were both relegated to the bottom from the top spot, where Google has taken over.

    Now, web search engine weren’t something new back then in the mid 1990s, but the revolutionary way Google algorithm achieved in search & retrieval of information. So, it is old idea, it was a very success story for Google because of the revolutionary way it is doing it. It simplify the task of search for users.

    The same thing could happen here with Xero if they collaborate closely with CSI for doing world class R&D. I have commented on Rod’s blog , about a series of research volumes in the application of Artificial Intelligence (AI) in Accounting & Finance. Well, this is a revolutionary way of doing accounting, exactly the same as Google emerged in the late 1990s. Existing practice (accounting) adopting a new way (methodology) of doing it.

    AI application in accounting is not new in its application in that domain, but it has mainly been applied to corporate level by PricewaterhouseCoopers and the likes. Xero are not in direct competition with these corporate finance companies, since they are in a different market. But I am pretty much sure that these revolutionary AI techniques are not yet adopted by Xero competitors such as MYOB and others. I had quizzed my accountant sometime ago about the functionality of MYOB, since I can tell the footprint of AI functionality , even without being a user of that product or knowing the source codes. From what I inferred is that MYOB has nothing of those functionalities. SaaS may come & go, but those AI functionalities will be around in the next 1000 years, since human cognitive processes that not gonna change much.

    I have seen a publication on using software agent ( AI ), that watches and learns how a human accountant does his/her job. One day, the accountant was sick and didn’t turn up to work, and the software agent took over all the accounting task for that day without a hitch at all in that company’s day to day’s operation. Software agent is different from automated pre-assigned task of conventional softwares . Learning software agent learns its external environment to gain knowledge and adapt to it. This is true and not a fictitious example, I am describing here. I have tried to search the citeseer free online scientific literature repository to see if I could find that paper, but to no avail. I was looking for this article, so that I could send it to Rod. I couldn’t remember exactly whether I read the article online or I read it thru a computing journal at Uni library. I read too many of these scientific publications that I couldn’t pinpoint of where I have come across such across.

    But there is my point. Using revolutionary ways to do accounting would definitely lure MYOB users and others to jump ship. Xero could definitely do this with the help of CSI. The AI researchers that is part of CSI are a world class team, and I do know some of them.

Leave a Reply