In fact, the ASX tech darling has climbed 60.5% higher in the past year and now boasts a market capitalisation of over $22 billion.
So, what would a $10,000 investment in Xero shares just 5 years ago look like today?
What would $10,000 in Xero shares 5 years ago be worth today?
On 16 September 2016, Xero shares were trading at $19.33 per share. That means a $10,000 lump sum would net an investor a tidy 517 shares.
The continued bull run in tech shares in the intervening shares means those 517 shares would be worth a tidy amount today. Shares in the Aussie tech group closed at $148.73 per share on Wednesday representing a 669.4% gain in the last 5 years.
That means those 517 shares would be worth a handy $76,893.41 in today’s dollars if that hypothetical investor was still holding today.
What’s driving the recent share price gains?
Xero shares currently trade at an astonishing price to earnings (P/E) ratio of 1,250 times. That reflects the incredible growth that investors are expecting from the Kiwi cloud accounting software group.
Interestingly, Xero has actually underperformed the S&P/ASX 200 Index (ASX: XJO) in 2021. Xero shares have edged just 0.2% higher this calendar year while the broad market index has added 11% to 7,417.0 points.
The high valuation multiples could have investors wondering what’s next for the company’s share price. However, at least one broker sees more upside in Xero shares.
A recent note from Goldman Sachs was slapped with a ‘buy’ rating and a $165 per share price target. Strong subscriber growth and monetisation of Xero’s user base were noted as a couple of factors supporting that outlook.
Xero shares have struggled to climb higher in 2021 but are still up 669.4% in the last 5 years. That is some impressive growth for the WAAAX share and its investors.