Why is the Xero share price being trashed on Tuesday?

The information and technology sector is trailing the market today.

| More on:
A businesswoman angrily throws her papers into the air.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Xero Limited (ASX: XRO) share price is taking a beating today.

In early afternoon trade shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider are down 2.2% to $73.13 per share.

That's a big improvement from this morning though, when the Xero stock was down 4.9%.

So what's going on with the ASX tech share?

What are ASX 200 investors considering on Tuesday?

To be fair, it's not just the Xero share price that's deep in the red today.

Logistics software provider WiseTech Global Ltd (ASX: WTC), as one example, is down 1% at this same time.

While the ASX 200 is down 0.1%, the information and technology sector is trailing the market, as witnessed by the 1.1% decline in the S&P/ASX 200 Information Technology Index (ASX: XIJ).

With no price-sensitive news hitting the markets, the Xero share price and the wider IT sector look to be under pressure following steep overnight losses on the Nasdaq Composite (NASDAQ: .IXIC).

With investors again fretting about the next tightening move from the US Federal Reserve, the tech-heavy index plunged 1.9% by the closing bell.

Is the Xero share price a buy now?

Xero stock is down a painful 50% in 2022 as the company got slammed by fast-rising interest rates.

But at $73.07 per share, does Xero represent a buying opportunity?

According to Goldman Sachs, the answer is yes.

Across its range of IT services, Xero currently has 3.3 million global subscribers.

But labelling Xero shares as a "compelling global growth story", Goldman points out the company has a total addressable market of some 45 million subscribers.

Goldman has a buy rating on the company with a target of $115.00 for the Xero share price. While that's well below the $146.22 per share Xero was trading for back on 4 January, it represents a 57% increase from the current price.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Five happy friends on their phones.
Share Market News

Goldman Sachs says these ASX tech stocks can rise 18% to 30%

The broker sees big returns on offer from these shares.

Read more »

A guy helps a girl lift a couch, both are laughing.
Technology Shares

3 of the best ASX tech shares to buy and hold until 2030

I think these stocks have exciting futures.

Read more »

A young woman uses a laptop and calculator while working from home.
Technology Shares

If I'd put $5,000 in Block shares 5 months ago, here's what I'd have now

Was it a good idea to invest in this payments stock five months ago?

Read more »

Close up of a sad young woman reading about declining share price on her phone.
Technology Shares

Why is the Brainchip share price sinking over 7% today?

What's going on with this tech stock on Wednesday?

Read more »

woman working on tablet
Technology Shares

Missed out on Nvidia? My best ASX tech stock to buy and hold

Do you have FOMO after the US chip maker's share price rocketed? Here's an Aussie company worth backing instead.

Read more »

Three businesspeople leap high with the CBD in the background.
Technology Shares

Guess which ASX small-cap stock is rocketing 45% on 'pivotal moment'

Investors have responded very positively to an announcement.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »