Comments on: On IPOs Xero and BF

By: Phil

Phil — Mon, 27 Jul 2009 10:27:57 +0000

I agree with Ben. Short term movements of about 10-15% would be fairly meaningless to the investors who did take the plunge here. 10-15% on a sharemarket is not unusual for an IPO, and people can quote all the supply-demand / free market / market economy theory they want, but I wouldn’t pay too much attention to it at this stage of the Xero game. There is too much uncertainty. Numbers are important, but more important in an IPO like this is the people, the idea, and the scale at which it could take off.

I don’t think people would look to make a quick buck out of something like this. Smart investors don’t put all their eggs in one basket. And they only have a limited amount of eggs – which is why they’re not snapping up more shares. The New Zealand market just isn’t big enough.

If I had money (which I don’t after returning from an 18 month OE), I would invest in Xero. I would look at the numbers, but would get excited about the people and the idea. Xero has both the people and the idea. It also has a head start on the competition. It also has incredible scale. Both globally and product wise. Financial markets are huge, and if Xero can get established it has huge potential for becoming a one stop shop for business finance needs – foreign exchange, loans, all banking.

By: Shaneo

Shaneo — Thu, 26 Jul 2007 05:34:10 +0000

Ben

While I think XRO has a sound business model and value proposition, and may do well in the future, at the end of the day I believe the IPO investors were sold up the river.

Lets looks at the basic fact.

1 share in XRO which was worth $1, and at one stage was valued at around $1.12 (from memory), “Mr Market” is now saying its only worth 87 cents (26/07/07 close).

“Mr Market” may not always be the most rational investor, but he knows the value of 1 share. “Mr Market” is the one who has shown the money and traded. He doesn’t explain away liquidity. He has instead put his money on the table and said 1 share in XRO is currently worth 87 cents.

The implications for those in the IPO? Clearly they are showing a paper loss. They may at some stage in the future decide to realise the loss, or realise the profit. I think that each day the share price remains below the $1 mark, the further dents the credibility of the promoters who have clearly overpriced the IPO. This will make it harder for them to seek further capital raisings in the future as investors may be a bit more sceptical of the hype.

By: Lance Wiggs

Lance Wiggs — Sat, 21 Jul 2007 05:27:08 +0000

Those who are waiting to sell at $1.10 should be buying right now so that they can clear a healthy profit.

That is if they believe the price will rise.

The range of prices for XRO so far is $0.87 to $1.17 – with that sort of volatility you’d expect people to pile in.

By: Nick Bryant

Nick Bryant — Fri, 20 Jul 2007 23:33:05 +0000

I suspect that one or two original investors are, but I also suspect that despite the current sell price of 92c there are very few parties willing to sell for much less than they got in at. So until someone is prepared to purchase at between 105 and 110, which is where is suspect the large parcels of sell orders are at, then it will sit where it is for a while. I wanted to be more definitive about this but couldn’t log onto to my online broker to see the actual buy and sell details.

By: Lance Wiggs

Lance Wiggs — Thu, 19 Jul 2007 10:51:31 +0000

then why are those original investors not snapping up more shares? If they believe XRO is worth $1 then that’s what the price should be.

By: benkepes

benkepes — Thu, 19 Jul 2007 02:22:38 +0000

I think what it means is that Xero investors, big and small, were making a long term play and don’t want to sell. In fact I doubt many of them follow the shareprice at all.

As such the current Xero shareprice is meaningless – the shareprice in 36 months however will be very very interesting