XERO FPO NZ (ASX: XRO) and Technology One Limited (ASX: TNE) continued their share price slide on Monday. Xero shares were down around 5% to extend losses in the last four trading days to 13.2%, while Technology One slid 4% to take its one-month fall beyond 12%.
The falls were far greater than the 0.6% fall of the ASX 200 despite no news being released by either company. In fact, recent news flow has been relatively positive. Here's what's been happening:
Xero
Xero's operational update last week disappointed some investors and analysts that were hoping for a better result from the group's US division. The conundrum is that Xero's shares closed flat the day after the results were released, indicating that the subsequent fall can't be all to do with the results.
Alternatively, I believe speculators are leaving the stock after the share price failed to bounce from a low in mid-September. The other query hanging over the stock is 10 million shares that will come out of escrow on October 16. Should holders sell, we could see the share price fall further, however this could be a great long-term buying opportunity.
As a positive side-note; any company delivering a 76% increase in paying subscribers year-on-year must be doing something right.
Technology One
Technology One shareholders should feel even more aggrieved, seeing as there has been absolutely no meaningful news released by the company to justify the 12% fall over the last month. In fact, the company's inclusion into the ASX 200 index should have been a catalyst for buying from fund managers and exchange traded funds.
One possible reason could be that the company is set to release full-year earnings soon and a lack of forewarning could be making some analysts nervous. Estimates for earnings per share are tightly grouped around 9.9 cents per share, indicating a price to earnings ratio of 31.
Analysts are expecting earnings per share growth of around 14% this year and 16% next year. That's not bad for a technology company in the current market, but there are other (perhaps better) options out there.
