Xero shares (ASX:XRO) added 6.55% today to close at A$75.12, marking a 10% rebound from the stock’s fresh 12-month low of A$67.93 and offering the first sign that buyers may be stepping in after a brutal drawdown. A glance at the 1 year chart below does not make positive viewing for XRO bulls that have seen the share price fall 33% year-to-date and lose more than half its value over the past twelve months.
The sharp bounce came after Xero fell 20% from March 6th through to yesterday’s close, amid a broader tech sell-off driven by surging oil prices, Middle East tensions, and persistent fears that the Reserve Bank of Australia will maintain its restrictive policy stance for longer than previously anticipated. The ASX 200 recorded its worst monthly performance since mid-2022 in March, falling almost 8% as rate-sensitive sectors bore the brunt of the repricing.
Markets have consistently highlighted Xero’s premium valuation relative to non-technology sectors, with trading communities noting that the stock trades at roughly double the price-to-earnings multiple of traditional ASX constituents despite its dramatic fall from grace.
The high-A$60s region has emerged as a potential support zone, with the 10% bounce suggesting that marginal sellers may be exhausted after three months of relentless downward pressure.
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Bulls point to Xero’s dominant position in cloud accounting software, its substantial global subscriber base, and demonstrated ability to expand margins when investment cycles normalise. The company’s significant free-cash-flow potential remains a key support for institutional investors willing to look through near-term volatility.
Bears counter that the stock’s trend remains firmly negative on longer timeframes and that fundamental challenges around growth sustainability and profitability targets remain unresolved. The broader macro environment continues to present headwinds, with elevated oil prices threatening inflation control and central bank policy still skewed hawkish.
The coming weeks will prove critical in determining whether Tuesday’s bounce represents genuine support formation or merely another failed rally attempt in an ongoing downtrend. With Xero shares trading 61% below its 52 week high from late June, the stock has once again found buyers at a level that had earlier offered support back in late 2022. A more constructive end to what has been another difficult month in the markets for holders. Bulls will be hoping that some of that momentum can be carried forward into April.
