Why did the Xero (ASX:XRO) share price have such a lousy month in November?

It’s getting further and further away now, but cast your minds back to November, and you might remember that it wasn’t a great month for the ASX share market. The S&P/ASX 200 Index (ASX: XJO) ended up going backwards over the month that was, falling around 0.92% between the start of the month and the end. But how did the Xero Limited (ASX: XRO) share price do?

Xero arguably remains one of the hottest ASX 200 growth shares on the market. It has delighted investors with a return of close to 750% over the past 5 years alone. Since 2012, the return has been closer to 3,000%.

But Xero shares have been struggling more recently. This online accounting software company is ‘only’ up 0.08% over the past 12 months. And year to date in 2021 so far, the company is down around 6%. So how did November treat the Xero share price?

Well, Xero began November at a share price of $149.51. When the month wrapped up on 30 November, Xero closed at $144.84. Yes, that means Xero had a big loss for the month, down approximately 3.12%. As you can tell, that’s significantly worse than the broader ASX 200’s performance (more than triple its losses). So what happened for Xero?

Why did the Xero share price underperform the ASX 200 in November?

Well, Xero’s lacklustre performance over November could be blamed on the company’s first-half results that it posted back on 11 November. The company reported revenues of NZ$505.7 million, up 23% from the previous period. Total subscribers increased 23% to 3 million, while Xero’s gross margin also widened by 1.4% to 87.1%.
But as my Fool colleague Mitchell dug into at the time, it seemed to be the “shift in company earnings from a $34.5 million profit in 1H FY21 to a $5.9 million loss in 1H FY22 might have put investors offside”.

Another factor that might have been at play for Xero last month was ASX broker sentiment. During the month, the Fool covered two brokers who slapped ‘sell’ ratings or equivalent on Xero shares in the wake of its half-year results. On 15 November, we covered Macquarie’s ‘underperform’ rating and $130 share price target. Then on 16 November, we looked at UBS’s ‘sell’ rating and $88 share price target.

To be fair, not all brokers were bearing on Xero during the month. We also looked at Citi’s ‘buy’ rating on Xero, replete with its $160 share price target. But it was likely that the combination of its half-year results and these mixed opinions from brokers was largely responsible for Xero’s poor performance over November.

Today thus far, the Xero share price is aksing $139.72 a share at the time of writing, down 0.90% for the day. At this share price, Xero has a market capitalisation of $20.77 billion.

The post Why did the Xero (ASX:XRO) share price have such a lousy month in November? appeared first on The Motley Fool Australia.

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• Why Afterpay, Liontown, Northern Star, and Xero shares are falling
• Are Xero shares worth their $21bn valuation? Motley Fool analyst Chris Copley weighs in

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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.

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