The Xero Ltd (ASX: XRO) share price is 0.02% lower in lunchtime trade on Tuesday. At the time of writing, the stock is changing hands at $115.60 a piece.
The share price peaked at an all-time high of $194.21 in late June but has since tumbled nearly 79% to today's trading price. For 2025 so far, the shares are down 31.02%.
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What happened to Xero shares in 2025?
The company posted lower-than-expected FY25 results in May, followed quickly by news of a US$2.5 billion acquisition of US-based Melio in June.
Investors weren't happy with the move and offloaded shares in the New Zealand-based cloud-based accounting software company in a panic about the deal's size and its projected cash flow. The deal was completed in mid-October, but investor confidence never recovered.
Later in November, Xero investors reacted unfavourably to the company's FY26 interim results, selling off more of the stock.
The company's FY26 results revealed a 20% increase in operating revenue to NZ$1,194 million. This was driven by ANZ revenue growth of 17% and a 24% jump in International revenue. Xero's EBITDA increased 21% to NZ$377.9 million. The company's net operating result was a little behind expectations, but its EBITDA was ahead. Its total operating expenses as a percentage of revenue are now expected to be around 70.5% in FY26.
Later in the same month, Xero was caught up in the ASX 200 tech sector sell-off. The sector decline, particularly of high‑valuation and AI‑linked tech names like Xero, follows investor concerns about overheated valuations and an AI bubble.
But analysts think the investor reaction has been way overdone and the sell-off unfounded.
Huge upside ahead in 2026
According to TradingView data, most analysts are bullish on Xero shares for 2026. Out of 15 analysts, 12 have a buy or strong buy rating on the stock. The average target price is $184.80 but the maximum is a whopping $229.73 per share. That's around double the $115.60 share price at the time of writing and implies an upside of over 98%.
UBS says that it is positive on the medium term growth outlook for Xero and believes the current share price is an "attractive buying opportunity". The broker has a $194 price target on the shares.
Ord Minnett also sees significant value in the shares. Last month, the broker put a buy rating and $200 price target on them. This implies a potential upside of approximately 80% for investors.
Macquarie is more bullish on the stock. The broker has an outperform rating and $228.90 price target on the shares, saying the company is well-positioned for growth in the US.
