Xero Ltd (ASX: XRO) shares are slipping today.
Shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider closed yesterday trading for $180.17. In afternoon trade on Thursday, shares are changing hands for $178.00 apiece, down 1.2%.
For some context, the ASX 200 is down 0.2% at this same time.
Today's underperformance isn't the norm for Xero shares, which are up 31.0% over 12 months and up 25.1% since the recent closing lows on 7 April.
But with such a strong rebound already in the bag, is it too late to buy the ASX 200 tech stock today?
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Should I buy Xero shares today?
Morgans' Damien Nguyen recently ran his slide rule over Xero shares (courtesy of The Bull).
"The share price of this global accounting software provider has performed strongly since April," Nguyen said.
"It recently completed a sizeable capital raising to buy a company to accelerate its US expansion plans," he added.
The acquired company in question is United States-based business-to-business payments company, Melio. Xero announced the US$2.5 billion (AU$3.8 billion) acquisition on 25 June. In FY 2025, Melio reported revenue of US$153 million.
And with the United States representing Xero's largest total addressable market (TAM) segment at US$29 billion, the ASX 200 tech stock aims to leverage Melio's business to accelerate its growth in the world's top economy.
However, Xero shares closed down 5.3% the following day on the capital raising news.
The company revealed it had raised AU$1.85 billion through a 10.5 million share placement to sophisticated and institutional investors. Investors reacted negatively, however, with the new shares priced at $176.00 apiece. That was 9.4% below the share price at the prior trading day's close.
Xero CEO Sukhinder Singh Cassidy was clearly optimistic about the acquisition. "Xero and Melio are highly complementary," he said.
He added:
Adding Melio's world-class team, technology platform, and innovative A/P solutions to Xero enables a step change in our North America scale and the potential to help millions of US SMBs [small and medium-sized businesses] and their accountants better manage their cash flow and accounting on one platform.
But with the big uptick in Xero shares since April, Morgans' Nguyen doesn't believe now is the right time to load up on the ASX 200 tech stock.
"While business fundamentals remain solid and are expected to deliver strong growth over the coming years, potential investors may want to wait for a more attractive entry point," said Nguyen, who has a hold recommendation on Xero stock.
"For existing holders, it makes sense to stay invested and monitor how the company executes its growth plans," he added.
