full year figures announced, page-3

This article about Xero from Edgeseven last Oct.

http://edgeseven.com.au/articles/xero-limited-asxxro-buy/


Would you pay $3 Billion?

The company has 125.2 million shares at a current share price of $24.50 a share.

This makes the company worth a touch over $3 Billion !!!

Without looking at the price chart and getting wrapped up in the emotion of the moment, would you rationally pay the equivalent of $3 Billion for a company that in FY14:

Will generate a loss of over $14 million
Has negative cash flow
Had to raise NZ$180 million of new capital to keep expanding
And, it is unknown if the company will turn a profit in FY15

Benjamin Graham’s perfect example
Benjamin Graham said that in the short run the stock market behaves like a voting machine, however, in the long run, it acts like a weighing machine. Xero is currently winning the popularity contest that is the voting machine however, its true value will be reflected in the long run with the weighing machine of its profitability.