Is the Xero Limited (ASX: XRO) share price a buy despite the ongoing coronavirus economic impacts on the business world?
What has happened to the Xero share price so far?
The Xero share price has fallen around 10% since its 19 February 2020 high. At one point it had dropped to $58.75 on 23 March 2020, the worst date for most shares, but it has gone up 35% since then.
There are few things as important to a business as making sure it continues with its compliance requirements like preparing financials, tax returns and BAS. Xero is integral for businesses to be able to access some of the government support. Xero is important for jobkeeper too.
I'd like to think that Xero's service is so affordable that it means businesses will keep paying for it as long as there's cash in the bank. The accounting software is mission critical for calculating the monthly profit/loss and monthly cashflow. Banks would want to see the numbers if they're going to give any sort of loan.
The key for Xero and its share price will be whether it's able to maintain (and grow) its subscriber numbers. The software giant receives attractive monthly cashflow. But a lot of small businesses are doing things really tough right now. Their revenue has dried up.
I believe that the businesses that are already using Xero are some of the more forward-looking ones who'd be more adaptable to this situation. I don't think many Xero subscribers will stop paying for Xero unless the economic damage goes on for an extended period of time.
Being able to use your software from anywhere at any time is a very attractive feature.
Will businesses be thinking about switching their accounting software during this period?
I think they might. Coronavirus has shown everyone the value of having cloud software as opposed to desktop software. Some businesses may not be generating much revenue right now. It's a perfect time to be trying to improve your business in other ways, such as by changing to Xero with its automation tools.
Foolish takeaway
Is the Xero share price a buy right now? Xero will be reporting in just over a week from now, so we'll get a good picture of what's going on. The fact it hasn't come out with a bad update already suggests it should report fairly well.
Considering interest rates are so low, I think today's lower Xero share price could make it a long-term buy. It may have lowered expenses, which will help cashflow.
