NZX probes Xero price drop
Xero has brushed off a "please explain" letter from the NZX issued in response to a 21.5 per cent drop in its share price between June 16 and this morning.
The software company noted that its shares had since added $2 and said it was complying with its continuous disclosure obligations.
Shares in Xero slid from $29.31 to bottom out at $23 this morning before recovering. The shares were trading at $24.83 this afternoon, valuing the company at $3.2 billion.
It confirmed it would issue a revenue forecast for its 2015 financial year at its annual meeting next month.
Xero issued an update on June 16 that said its annualised monthly revenues had increased from $93 million to $100m between March and May.
One analyst speculated that the increase may have been viewed by investors as disappointing, and a subsequent decline in its share price may have triggered panic selling by some retail investors.
Xero told the NZX its shares were subject to significant volatility because of its tightly held share register.
In March and April, there was a "substantial general rerating" of cloud-software stocks, but Xero was confident in its growth strategy, chief financial officer Ross Jenkins said.