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Dotcom claims credit for Xero shares dropping 20%

Not content with trolling over the Hager book, Kim Dotcom decided to pick another fight with business icon Rod Drury, baiting him over Xero's [NZX: XRO] share price.

Get off the grass, Kim.

The political party Dotcom founded is campaigning for cheaper and better broadband connectivity, domestically and internationally. Drury has pushed hard on both those issues. So you'd think he'd be someone Dotcom would respect.

Not for a minute. Drury's crime is that, when prodded for his opinion of Dotcom by an interviewer on TVNZ's Q+A, he replied:

"I thought Kim at the beginning was you know, it was really cool to see somebody like that come through, but his manipulation of the media, he's very media savvy, understands that it's a good story, that journalism's cheap," Mr Drury said.

"Kim doesn’t represent the Internet generation. I represent the Internet generation. We've created 800 new jobs, we're paying lots of PAYE.  We're investing, we're burning, we're creating export revenue.  So I just think it's a sideshow and wish it would just go away."

True that. Xero has created a lot of high quality jobs, most of them in NZ, and many more through its software and service partners. The province of Dotcom's Megaupload fortune is being questioned by criminal and civil actions, and his latest start-ups, Mega an Baboom, are having issues. Mega's controversial reverse listing has been delayed twice, and there's constant mystery around its investors. Baboom is constantly extending its capital-raising deadline. Dotcom did create some software development jobs around Baboom, but he offshored them to Portugal.

Dotcom responded to Drury's Q+A comments by tweeting that Xero shares were overvalued.

Not one to let a feud lie, the Internet Party and Mega founder brought the issue up again last night, tweeting:

Rod responded:

To which Kim replied:

$6.25! That'll learn 'em! the Xero founder will just ignore him from this point.

Xero shares [NZX:XRO] have pulled back this year, but the decline is pegged to questions over the company's market cap, and the heady valuations of software-as-a-service companies worldwide. 

The real reason for this week's pullback
Across the ditch, Macquarie has just initiated coverage of Xero with an “underperform” rating, using a familiar line: “beautiful company, expensive stock”.

“We expect Xero to gain significant market share of the small business accounting software market. They have a compelling product and have gained a good market share in the countries they entered first. However, the current share price is factoring in too much upside,” Macquarie analyst Daniel Frost said.

Only one of the five analysts officially covering Xero, First NZ Capital's James Schofield, has the equivalent of a buy rating.

The debate about whether Xero's valuation got a bit over-heated will continue, especially given the challenge posed by giant incumbent Intuit in the US. But there's a broad consensus it will succeed as a company long term.

As for Dotcom's skills as a stock picker: in November 2012, in a pique over the latest installment of company's flagship game, Call of Duty, he predicted Activision shares would fall. At the time, they were trading around $US11. By February 2013, they were up 23%. Today, Activision closed at $US23.31.

ckeall@nbr.co.nz

What do you think? Has Xero's recent fall created a buying opportunity? Click here to vote in our subscriber-only business pulse poll.

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Comments and questions

Oh dear Dotcom, are you really that jealous of Mr Drury? Don't get me wrong, Xero was overvalued for what it was a year ago and is now coming back to earth slowly, but at least Mr Drury has a business that is highly rated, growing exponentially and bringing a ton of revenue into NZ. Compare that to the Mega Baboon story of multiple extensions of a small capital raising, a backdoor listing through a nearly defunct listed-company, multiple shady characters involved, multiple resignations before listing and, most importantly, no prospectus or real major revenue channels as Dotcon has pretty much alienated his business from the start with his history.

I would take Xero at $40 before taking any of your TRS/Baboon shares at 0.004 cents Mr Dotcom.

I think John Cassidy could write another book with exactly the same title, albeit about the "King" Kimmy media bubble rather than the millennial stock market blowout.

Put your money where your mouth is Moose and buy the shares at $40
Yeah right

I did buy them at $40. Then sold them at $44.50. Unfortunately, I can no longer do so as they are much cheaper now.

Tis fun playing in a bubble :)

Hope you declare the profit in your next tax return

Clearly he's deluded, but you still need to ask the question why anyone would vote for the puppet party of a man who takes pride in destroying value in an NZ company?

Regardless he is totally self made
Appears to have over reached
More IT global experience than most

The historically young non voters appear fascinated with him

Oh come on. Rod Drury is correct, the only thing Dotcom over values is himself and the only thing he destroys is doughnuts.

Kim dotcom is perfect example of what could go wrong when you offer residence status to someone solely on the basis his wealth.

He is nothing more than a distraction at national scale, diverting us from discussing important issues. He charmed many of us at the beginning but later on more I came to know about him it's hard to support him.

I am just looking forward for the day he is exported out of this country.
- Fellow migrant

Why is this fat clown still in our country, doing his best to disrupt our system and government ! Others who have committed less sins have been deported and sent back to where they originated, and this fat clown is still here ?

Anonymous, Sam is very succinct to the point and undeniably correct. KDC is a magnet for trouble, and a big mouth to boot.

Kudos to Sam and Rod for calling spade a spade.

"Pullback" implies we are not witnessing the popping of the Xero bubble ...

did Kim Dotcom sit on the shares?

Can kiwi's take Dotcom so seriously!
You need to mix with the German's. My brother-in-law was a bit like Dotcom - "always taking the Mickey".
Blimey, have we become so serious we can't see past our noses?
It must be all these "Apps" I suppose to thank for this!

New Zealander's have always been pretty self righteous and lacked a sense of humor. The sooner NZers realise we need the rest of the world more then it needs us the better.

There is a chance that Dotcon could be an integral part of the next Government of NZ, post 21st September, perish the thought. That is why a lot of people are taking him seriously.

Would like to see the Germans sense of humour if a New Zealander worked up a crowd to call out F**k Angela Merkel.
Whether you like the countries leader or not I believe most Germans would also see that as totally disrespectful and not funny.

One only needs to look at the highly regarded people who have ditched Kim Dotcom, once his true personality and values are known, to realise this buffoon needs to shut up and quietly depart these shores. More than one highly respected Mega CEO has seen the light and quit to mitigate the loss of their reputation by association with this clown.

As a 2nd generation kiwi, I cannot believe that the government let in KDC just because he had money, apart from his over zealous mouth, what does Mana Internet party have to offer to NZ, absolutely nothing, and if he hadn't paid candidates to setup/attend political rallies etc, where would the Mana Internet party be, absolutely no where.

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