Seeing someone sell this made me think: what are they actually worth with what’s going on in the world right now? Xero’s a solid business, but the next couple of years don’t look anything like the analyst models still assume. Small business is under real pressure — rates, fuel, credit, demand, insolvencies — and that flows straight through to Xero. A failed business doesn’t need accounting software, and a stressed one isn’t upgrading or adding extras. That alone knocks the growth trajectory down to something far more modest than the 25–30% some people are still pencilling in.

Subscriber growth is already slowing. The UK has cooled, the US is still a grind, and churn is creeping up because businesses are folding. Xero’s sticky, but stickiness doesn’t beat macro. The Melio deal might work long term, but right now it just adds cost and uncertainty. It doesn’t magically fix the US problem.

So instead of the fantasy growth rates, I’m using something that actually fits the environment: low‑double‑digit at best. And once you adjust the growth, the valuation multiple comes back to earth. You’re not paying 8–10× revenue for a business growing in the teens. You’re paying something closer to 4×.

Current revenue is around $2.1b.

At ~4× revenue, you get a fair value between $50–65 a share. I’ve used $57 as the midpoint.

Good company, tough backdrop. The market’s finally pricing the world we’re actually living in, not the one in the spreadsheets.

And just to show how quickly sentiment can flip — a month ago Morningstar had them at $100. They still list fair value at $100 with “High” uncertainty. The world has clearly moved a lot faster than their model has.