Is ASX 200 tech share and former market darling Xero Limited (ASX: XRO) a 'safe' ASX share?
Well, it certainly hasn't been for investors over the past year or two. The Xero share price last hit an all-time high back in November 2021. But since then, investors have been burned… badly burned, by Xero shares.
Since Xero clocked a share price of around $155 back in November last year, this cloud-based accounting software provider has fallen by a painful 55% or so. It's going for under $70 a share today, less than half of what the company was worth a year ago.
The company is also down by more than 52% in the 2022 year to date:
So Xero shares certainly haven't been a safe place to have had your capital invested. But, by most definitions, no share is truly 'safe'.
If you are looking for somewhere to park your dollars that will never fall in value and steadily rise over time, no ASX share fits this description.
In fact, the only asset class that truly does is a government-guaranteed savings account or term deposit at a bank.
How 'safe' can an ASX 200 share like Xero be?
A company can be the most consistently profitable business in the world. But as the legendary investor Benjamin Graham once said, the share market is a voting machine in the short term. Day to day, the only thing that sways share prices is investor sentiment.
Looking at Xero shares over the past few years, this company does look like a safe place to have invested cash. Since 2012, the Xero share price has risen by an impressive 1,406%. Sound safe?
If it does, consider this as well. Even though Xero has given its investors these kinds of stunning returns, it has also severely clipped their capital several times.
Between March and October 2014, Xero shares went from around $40 to under $20. In 2018, the company fell from over $50 a share to under $38. In early 2020, the company crashed from $87 a share to $61. And now in 2022, investors have endured more than a 52% drop.
So Xero shares have never been safe. But then again, what is?
What we do know is that Xero has given investors a return of 1,406% since 2014.
