Xero Ltd (ASX: XRO) shares have fallen further into the red in Wednesday lunchtime trade.
At the time of writing, the ASX tech shares are down around 5% to a seven-year low of $58.28 a piece.
Today's slide means the shares have now shed 34% of their value since spiking to a six-month high of $88.95 in August.
While it looked like the cloud-based accounting software company was finally rebounding from a huge share price crash in the second half of 2025, investor sentiment has reversed, and the shares have now dropped to a fresh multi-year low.
Xero shares are now down 48% year to date and 64% lower than 12 months ago.
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What has happened to Xero shares over the past month?
Xero shares were caught up in a broad-based sell-off of technology shares earlier this year, when investors were spooked that AI could replace the core services of companies like Xero.
The shares rebounded strongly through July and most of August, driven by an investor rotation back into growth and technology stocks. It looks like investors started to become more confident that the company can keep growing revenue and become more profitable.
Xero's most recent FY26 results, posted in May, confirmed that, too. The company reported a strong increase in its FY26 revenue, which it said was helped by subscriber growth and higher prices.
There hasn't been any price-sensitive news out of Xero to explain why the share price changed course over the past month.
It's possibly the result of profit-taking investors taking their gains off the table after the July-August rally, combined with higher-than-expected inflation figures and news that the RBA could hike interest rates again next week. Investors have rotated away from growth stocks and into safer, more reliable assets amid fears of another spike in sharemarket volatility.
And this sentiment shift acts as a strong headwind for companies like Xero.
Is there any chance of a rebound?
According to the experts, yes, there's a good chance that Xero shares will rebound over the next 12 months. And some expect the upside to be significant.
The company has sticky subscription revenue and huge potential for growth both into new markets and with new offerings.
Market Index data shows the majority of brokers have a buy rating on the shares. The $112 average target price implies that the shares could jump another 94%, at the time of writing.
Sentiment is just as positive on TradingView. Out of seven analysts, six have a buy/strong buy rating and one rates the shares as a hold. But they all agree there will be an upside ahead.
The average $111.25 target price implies a potential 92% upside, while the maximum $143.88 implies that Xero's shares have the potential to rebound 149%, at the time of writing.
