What $10,000 invested in Xero (ASX:XRO) shares 5 years ago would be worth today

Shares in this tech darling have struggled to maintain momentum in 2021…

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Xero Limited (ASX: XRO) shares have been outperforming for years. Part of the exclusive ‘WAAAX‘ group of Aussie tech companies, Xero has gone from strength to strength.

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.

Foolish takeaway

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.

Should you invest $1,000 in Xero right now?

Before you consider Xero, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Xero wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of 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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