A rollercoaster morning has seen shares in accounting software firm, Xero, drop by almost ten per cent, before rebounding to a decline of just two per cent.

Shares hit a nine-month low at $23.00 this morning, however the volatility of Xero's shares today is more a representation of the share market as a whole, as opposed to issues with Xero, according to Forsyth Barr analyst Blair Galpin.

"Looking across the board, you've got Wynyard slipping back a few cents, diligent's fallen a few cents as well. They all seem to have bounced back a bit but early in the morning they all dropped back a fair way. Its not a Xero specific thing, its across the board at this stage," Galpin said.

The company have been tracking well, hitting a major milestone last week, reaching $100million in annualised revenue. Chief executive Rod Drury said he was confused about the drop, given the company's recent success, however he dismissed the share price as less important than how the company was tracking.


"We just put our heads down and operate the business and it's going very well. We tend not to look at the share price too much. We're really more concerned with where the share price will be in five years time," Drury said.

Galpin also noted the current share pricing was more in line with where Forsyth Barr expected it to be.

"A lot of these technology stocks here, and a lot of them overseas, have all slipped back quite a lot since their highs in February/March. They're definitely a lot more realistic in terms of their numbers. [Xero's share price] is a lot closer to where we think the appropriate valuation is given its current risk profile." Galpin said.

The rapid drop of 21.52 per cent in Xero's share price over the last week prompted the NZX to issue a price enquiry earlier this morning, requesting the company confirm it was not with-holding any relevant information from the share market.

Xero chief financial officer, Ross Jenkins, issued a statement in response, saying the company was complying with regulations, and noting that the previous upward trend in the share price was being offset by a general re-rating of SaaS stocks, which had affected Xero's share price.

Xero shares hit a peak in March this year at $44.98. Shares are currently trading at $24.92.