Down 54% in a year, are Xero shares now a buy, hold, or sell?

Xero Ltd (ASX: XRO) shares are sliding today.

Shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider closed yesterday trading for $74.25. In morning trade on Wednesday, shares are changing hands for $73.17 apiece, down 1.5%.

For some context, the ASX 200 is up 0.1% at this same time.

Unfortunately for long-term shareholders, today’s underperformance is all too familiar. With today’s intraday losses, Xero shares are down 54.2% over the past 12 months, compared to the 1.4% one-year gain posted by the benchmark index.

Though a more accurate comparison here would be against the S&P/ASX 200 Information Technology Index (ASX: XIJ), which has crashed 40.9% since this time last year.

As you’re likely aware, ASX tech shares were caught up in a broader global sell-down of the tech sector. That came amid the so-called ‘SaaSpocalypse’, which refers to concerns that AI could potentially replace many of the services that Software as a Service (SaaS) companies like Xero provide.

ASX tech stocks have also come under pressure amid rising interest rates. Growth-oriented shares like Xero tend to be priced with higher future earnings in mind. And as interest rates go up, so too does the present cost of investing in those future earnings.

Which brings us back to our headline question.

With the company’s share price having lost more than half its value over the last year, is the ASX 200 tech stock now a good buy?

Xero shares: Buy, hold, or sell?

Gray Perry Wealth Advisers’ Blake Halligan recently analysed the outlook for the embattled ASX 200 tech stock (courtesy of The Bull).

“Xero remains a leading cloud accounting platform, with a dominant position in Australia and New Zealand,” he said.

Halligan added, “Fiscal year 2026 operating revenue increased 31 per cent, supported by 506,000 net customer additions and the Melio Payments acquisition.”

But amid concerns over the integration costs of that acquisition, Halligan issued a hold recommendation on Xero shares.

He concluded:

Melio should aid in revenue growth, but costs associated with its integration contributed to a 27 per cent fall in net profit after tax and a gross margin decline from 89 per cent to 83.9 per cent.

The profitable ANZ and UK businesses offer growth potential and could assist in a continuing share price recovery.

Commenting on Xero’s completed Melio acquisition following the company’s FY 2026 results release, CEO Sukhinder Singh Cassidy said:

We have powerful momentum across our markets, and delivered strong EBITDA growth while absorbing Melio. This has moved us beyond single-job workflows in the US by integrating Melio to unite accounting and payments on one platform.

The post Down 54% in a year, are Xero shares now a buy, hold, or sell? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.