Xero, the Kiwi accounting software provider that became a $2 billion company today, has the potential to become New Zealand's biggest firm by market capitalisation, fund manager Brian Gaynor says.
The executive director of Milford Asset Management said the huge rise in the company's share price this year was being driven by United States-based investors who were more interested in customer acquisition than more traditional methods of analysing businesses, such as earnings multiples.
"It's perceived that Xero is making huge progress in terms of customer reach and acquisition of customers," said Gaynor. "This could be the biggest company in New Zealand [by market capitalisation] within a few years, which would be fantastic for New Zealand and fantastic for the sharemarket."
With a market capitalisation of $5.8 billion, Fletcher Building is currently New Zealand's biggest listed company.
Xero's share price hit a new all-time high of $17.40 this morning, which took its market capitalisation to $2.04 billion.