Here’s how the Xero (ASX:XRO) share price performed in 2021

The New Zealand software provider has been a star performer for investors over the past 10 years. But how has it fared lately?
The post Here’s how the Xero (ASX:XRO) share price performed in 2021 appeared first on The Motley Fool Australia. –

Long-term shareholders of Xero Limited (ASX: XRO) have every reason to smile.

According to Google Finance, the stock has grown a phenomenal 3,000% since listing on the ASX almost 10 years ago.

Even over the last 5 years, Xero shares have exploded 738%.

But 2021 was an anti-climactic year for investors in the New Zealand cloud accounting software provider.

Valuation and market anxiety brought down Xero shares

Over the last calendar year, the Xero share price was down 3.66% to close at $141.44.

That’s despite the S&P/ASX All Technology Index (ASX: XTX) rising 3.72% over the same period.

In some ways, Xero’s a victim of its own success and popularity. The Motley Fool analyst Chris Copley said in a November video that the nose-bleed valuation had simply become too much to bear.

“There’s a lot of lofty expectations built into the share price that investors should be wary of when investing in Xero.”

Combine that with 2021’s biggest obsessions — persistent inflation and rising interest rates — and it’s a wonder the Xero share price didn’t fall further over the year.

Still good prospects in the long run

Despite the underperformance in 2021, both Copley and Medallion Financial managing director Michael Wayne told The Motley Fool that holding Xero shares for the long term could still bear fruit.

“We are drawn to the capital-light and scalable software-as-a-service attributes of the business,” said Wayne.

“We continue to be encouraged by the sticky nature of the product.”

Copley said it would be unreasonable to expect the next 5 years would bring the same returns as the last 5. But the Xero share price would still be a “market beater”.

“It’ll continue to grow for a long period of time. Its tail is long, which means I think it can get double-digit growth for a long period of time,” he said.

“You really do need to look well long-term into the future for this one because even in 3 to 5 years it’s still going to probably have quite a lofty multiple.”

To buy in, Wayne would wait until there is a dip during the coming year.

“We feel it best to be patient as the share price is prone to volatility,” he said. 

“All else remaining equal, we would look at buying around the $110 to $115 level.”

Copley, a former accountant, remembered how much Xero helped make small business owners’ lives easier.

“I used to train different clients on how to use some of these accounting platforms, and Xero was by far my favourite solution.”

The post Here’s how the Xero (ASX:XRO) share price performed in 2021 appeared first on The Motley Fool Australia.

Should you invest $1,000 in Xero right now?

Before you consider Xero, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Xero wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

These ASX mining, tech, and bank shares could be buys in 2022

3 ASX growth shares could be strong buys

2 ASX 50 shares to buy in 2022

Xero (ASX:XRO) share price dips amid acquisition news

Are these 2 strong ASX 200 shares buys?

Motley Fool contributor Tony Yoo owns Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!