Xero Ltd's stock plummeted 12.64% during intraday trading on Wednesday, following critical analyst commentary on the company's recent product initiatives.
Morningstar stated that while Xero's new AI tools feel "natural and well-placed," they view them more as defensive features rather than a meaningful growth driver. The brokerage also criticized the integration of Melio, the U.S. small-business bill-pay platform Xero acquired, citing a poor user experience with separate logins and limited native functionality.
Morningstar maintained its A$100 per share fair value estimate, noting minimal evidence of high returns on the company's product development investments. This analysis comes as Xero's stock has declined 15.72% year-to-date, reflecting ongoing investor concerns about the company's growth prospects.