It has been a tough year for Xero Ltd (ASX: XRO) shareholders.
The cloud accounting company's share price is down almost 50% over the past 12 months, with selling continuing today as Xero shares slipped another 0.43% to $93.35.
That leaves the stock sitting near its lowest level since early May 2023.
So, what has gone wrong here, and does this pullback finally create a buying opportunity?
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Why have Xero shares fallen so hard?
Xero's slide has not been driven by a single issue, but by several overlapping factors.
In February 2025, the stock was trading near $180 per share before a broader tech sell-off and strategic concerns weighed on sentiment.
A key catalyst for the sell-off has been the company's acquisition of the US-based payments platform Melio for US$2.5 billion. The deal was intended to open the lucrative US small business market, but some investors have been concerned about the price paid and the time it will take to deliver returns.
At the same time, investors have started to question growth in Xero's core subscriber numbers and profits. Those concerns are strongest in overseas markets, where competition is tougher, and growth is harder to achieve.
What does the chart say?
From a technical point of view, Xero shares are still under pressure.
Most moving averages point lower, and many technical indicators currently rate the stock as a strong sell.
Indicators like the relative strength index (RSI) also suggest the stock has been heavily sold. The RSI is in the mid-20s, which usually signals oversold conditions, but it does not guarantee a rebound.
On the other hand, the chart suggests there is support around the $92 level, where buyers have stepped in before. Resistance sits higher around the mid-$90s to low-$100s, which could limit any short-term bounce unless buying picks up.
What are analysts saying?
Even though the share price has fallen, many brokers are still positive about Xero over the long term. Most analysts continue to rate the stock as a buy, with price targets well above current levels if the business improves.
Brokers also believe the market may be underestimating the value of the Melio deal. They expect Xero's core accounting business to grow faster as the integration progresses.
Key dates to watch
Xero is due to release its full-year results on 14 May 2026. This update could have a big impact on the share price.
Investors will be watching whether revenue and subscriber numbers continue to grow, especially in the US. They will also be looking for any changes to profit and cash flow guidance, and updates on how the Melio business is tracking.
Foolish Takeaway
At current prices, Xero shares are deeply discounted from their recent peaks, and some long-term buyers may see that as a compelling entry point.
However, the technical signals remain weak, and analysts differ on timing.
If you're considering a position, waiting for signs of improving fundamentals or a break above key resistance could help reduce risk.
