Just when it looked like Xero shares might finally find some support, the selling has continued on Friday.
Xero Ltd (ASX: XRO) shares are currently down 3.21% to $57.125, having fallen as low as $56.22 earlier in the session.
That leaves the stock trading around 64% below its value 12 months ago and almost 50% lower in 2026.
And yet, I'm becoming increasingly bullish.
While the share price suggests something has gone terribly wrong, Xero's underlying business continues to deliver impressive growth.
At these levels, I think investors could be looking at an excellent long-term buying opportunity.
Here's why.
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Xero's business is still growing
Looking at Xero's latest financial results, you'd be forgiven for wondering why its shares have fallen so far.
According to its FY26 results, operating revenue increased 31% to NZ$2.75 billion, while adjusted EBITDA climbed 18% to NZ$757.4 million.
The company also added 506,000 customers, taking its global customer base to 4.92 million.
Annualised monthly recurring revenue jumped 37% to NZ$3.27 billion, while free cash flow reached NZ$554 million.
Those are impressive numbers, particularly when you consider what's happened to the share price.
Admittedly, net profit declined 27% to NZ$167.4 million, with acquisition-related costs weighing on earnings.
But I'm far more interested in where the business is heading over the next few years.
Management expects FY27 revenue of NZ$3.62 billion to NZ$3.73 billion, alongside adjusted EBITDA of NZ$860 million to NZ$920 million.
That's another substantial increase in revenue, and a good indication that Xero's growth story is far from over.
Why I'm bullish on Xero shares
I think investors are overlooking just how much growth Xero still has ahead of it.
The company has previously estimated its addressable market at approximately 100 million small and medium-sized businesses worldwide.
With fewer than 5 million customers today, there's still an enormous opportunity to expand.
And it's not just about attracting more subscribers.
Its acquisition of Melio gives Xero a stronger position in the US payments market, opening up another opportunity to grow revenue beyond accounting subscriptions.
I also think AI could make Xero's platform more valuable over time by automating more of the financial tasks involved in running a small business.
The company already has an established platform, millions of customers, and access to valuable financial data.
With revenue expected to grow by around 30% in FY27, I think the market is seriously underestimating Xero's long-term potential.
All in all, I see an excellent opportunity to buy a high-quality growth business at attractive levels.
