Xero Ltd (ASX: XRO) shares have skipped further into the red in Tuesday morning trade.
At the time of writing, the shares are down around another 2% to $68.58 a piece. At one point this morning, the shares were changing hands as low as $68.48 each.
This morning's losses extend yesterday's 4.3% decline.
It's been a long line of share price declines for the ASX tech company over the past year. Since spiking to an all-time high of $193.77 a piece in June 2025, the shares have shed a huge 64% of their value.
They're now down around 38% for the year to date and 59% lower than this time a year ago.
Image source: Getty Images
What happened to Xero shares?
Xero shares have faced several major headwinds over the past 12 months.
The continually falling share price is mostly the result of a sector-wide sell-off of technology stocks. This followed rising concerns that AI could disrupt traditional software models.
In late 2025 and early 2026, many investors were spooked by the idea that smarter, cheaper tools could reduce the need for subscription platforms like Xero. Sentiment for tech shares, including Xero, quickly turned south.
At the same time, a sharp increase in the value of some ASX tech shares in 2025, including Xero, also sparked concerns that tech companies were overvalued and overdue for a price correction.
The good news is that despite the continued stock sell-off, there is still enormous potential for Xero and its shares over the next 12 months.
Xero benefits from an incredibly sticky subscription base and high customer retention rates, which means its revenue is relatively stable.
As a relatively small market player, it also has a lot of growth potential. Xero is working to expand its presence in the UK and the US. It is also focused on expanding its product suite, including payroll and workflow automation offerings.
What do brokers tip for the ASX tech stock next?
Market Index data shows that the majority of brokers are very bullish on Xero shares and have a buy rating on the stock. The average target price of $145.69 implies an impressive 112% upside at the time of writing.
TradingView data shows something very similar. The majority of analysts have a strong buy rating on Xero shares. They have a slightly lower $130.12 average target price, but that still implies a potential 85% upside ahead.
Some are even more optimistic and forecast the shares to rocket another 237% to a maximum target price of $237.38.
Last month, Morgans upgraded the stock from hold to add and assigned a $215 price target. The broker cited improving sales momentum and disciplined cost management.
