It’s a terrifying sight.

Enough to make you gasp.

Enough to make you break out in cold sweat.

Just take a look at this.

 

Source: Google Finance

 

Goodness gracious. Talk about falling off a cliff. What’s happening here?

  • Well, let me give you a bit of historical context. Once upon a time, Xero [ASX:XRO] used to be a Kiwi tech unicorn. It first emerged in 2006, punching above its weight by operating on a SaaS (software as a service) model. The Company provided useful tools for bookkeeping, payroll, and invoicing.
  • Early investors who made a bet on Xero enjoyed an incredible bull run. It became a ten-bagger in no time. No wonder it was treated like a media darling. A bona fide New Zealand success story.
  • But lately, the fairy dust seems to have evaporated. And Xero has lost its shine. The Company’s stock price has plunged over 50% over the last 12 months. Disastrous.
  • But here’s the thing: maybe it’s not really the Company’s fault. Perhaps it’s just bad luck. Xero has been caught up in a wild storm completely outside its control.

Right now, we’re seeing a historic market upheaval. It’s become known as Software Armageddon.

  • There’s been a sudden shift from AI-phoria to AI-phobia. It’s happening because investors have become fearful that the rise of artificial intelligence is going to make software companies obsolete.
  • This means that Xero — along with the rest of the software industry — has been thrown into the dustbin. We’ve seen a lot of panic-selling lately. By early February, over $1 trillion in market cap been erased.
  • For me, this raises an important question: is the doom-and-gloom for real? Or is it actually oversold? Well, I want to cut through the noise and get some straight answers here.

 

 

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