Rocket Lab, Xero and Air New Zealand are some of the most widely held stocks among NZ retail investors. They all have strong brands and growing revenue. And they’ve lost a combined $90bn in share value this year. What’s going on?

With the downturn of the housing market and the growth of KiwiSaver and retail investment platforms such as Sharesies and Hatch, more New Zealanders than ever before are invested in the stock market. But while both the NZX50 and the S&P 500 have enjoyed healthy returns over the last year, it hasn’t all been smooth sailing for investors in some New Zealand-founded businesses. 

Aerospace company Rocket Lab, the most widely held stock among Sharesies investors, is down 55% since May. Air New Zealand, the second most widely held, is down 25% since February, continuing a 56% decline since 2021. And Wellington-based accounting software company Xero, which rode a wave of hype from local investors in the late 2010s, is down 62% from its June 2025 high. 

These three companies have lost a combined $NZ89.5bn NZD in market cap relative to their 12-month highs. Rocket Lab, the largest of the three by some margin, is responsible for $NZ67.2bn of this. 

Aside from retail investors managing their own funds, hundreds of thousands of other New Zealanders have small holdings in these three companies through their KiwiSavers (especially for Air New Zealand, the only of the three that is currently listed on the NZX). 

In each case, the decline can partly be attributed to management decisions but is more broadly the result of global forces wreaking havoc on their particular industry sectors. 

Xero: surviving the SaaSpocalypse 

The downturn began on February 3, 2026. In a single day, approximately $NZ485bn of market cap value was wiped out from software and financial services stocks. Jeffrey Favuzza, a trader for Jefferies, dubbed it the “SaaSpocalypse”, an apocalypse for software-as-a-service stocks. It has since become a widely used expression on Wall Street. 

Just about every company that makes an app you might use at work has taken an absolute beating: Salesforce, Adobe, Workday, Servicenow, Autodesk. Most have stayed flat or continued to decline ever since February. Xero was no exception. Its closest competitor, Intuit, has declined in near-perfect parallel.

The trigger for the sudden selloff, according to analysis by Forrester, was a key advancement in artificial intelligence. Anthropic released new features for Claude allowing it to be used as a desktop plug-in – something that could, in theory, trawl your computer and turn a hodgepodge of spreadsheets and loose receipts into a legible financial statement, a potential competitor for an accounting software firm like Xero. 

The idea that AI models could directly replace established software, or that AI-assisted coding would reduce the barrier for entry for low-cost competitors, has caused enough uncertainty to keep investors away. 

However, some have argued that the AI risk is overblown. Morningstar analyst Roy van Keulen, who has been among the most active voices on Xero, argued that the stock has become “materially undervalued” despite holding dominant market share in New Zealand and Australia. 

Rocket Lab: a space race no one can predict 

It’s quite a remarkable thing that Rocket Lab can lose over half its market cap and still be up 67% over the last 12 months. Between May 2024 and May 2026, the company’s stock rocketed (pun intended) from $US4 per share to a high of $143.48 – a return of 3,487% for someone who correctly picked the top, or a paltry 1762% for the bagholders who refused to sell. A pullback like this is not out of the ordinary after such a run, especially for a speculative company that is still yet to turn a profit, but there are real concerns. 

Alexander Potter, an analyst with Piper Sandler who has become one of the most prominent voices on space sector investments, argued in a research note that Rocket Lab’s future growth potential was highly concentrated on the success of the Neutron rocket, which has been repeatedly delayed and is now scheduled for its maiden launch in late 2026. 

Then there’s the Elon Musk problem. Until June, Rocket Lab was the most advanced pure-play space stock available to regular investors. Since SpaceX’s IPO, investors now have the option of choosing a much larger and more established competitor. 

SpaceX is notoriously one of the most expensive stocks on the market, trading at a valuation of $US1.6 trillion against revenue of just $8bn. Potter pointed out that Rocket Lab is even more overvalued on an enterprise-value-to-revenue basis. He concluded that a competitor, AST Spacemobile, offered a better valuation and more attractive upside to investors. 

Air New Zealand: airlines suck now 

Air New Zealand is forecasting a full year pre-tax loss as high as $390 million for the 2026 financial year. And while that’s partially the result of management decisions, it’s mostly just an awful time to be in the airline industry. 

The International Air Transport Association last month slashed its 2026 global airline industry profit forecast from $US41bn to $US23bn, with a net profit margin of just 2%, the worst performance since the Covid pandemic. IATA director general Willie Walsh told Reuters he expected some smaller carriers to go bankrupt or be taken over by larger airlines. 

Walsh cited two main causes: the closure of the Strait of Hormuz, which caused the price of jet fuel to double, and manufacturing delays from Boeing and Airbus forcing some airlines to keep running older planes with higher fuel and manufacturing costs. 

Air New Zealand is particularly exposed due to geography; its international routes are longer than most of its main competitors. But the company has also been criticised for some of the company’s financial planning. The airline also had less protection than usual at the worst possible moment – it took out jet fuel swaps to hedge against fuel price volatility, but these expired before the war in Iran began. 

What it means for New Zealand investors

Rocket Lab, Xero and Air New Zealand are three of New Zealand’s proudest success stories; innovative companies that have received international praise and are recognised as leaders in their fields, albeit with wildly different origin stories. 

Air New Zealand was established as a state-owned enterprise, is still 51% government-owned and has received multiple public bailouts. Rocket Lab has received government support through bilateral treaties, regulation changes, and the creation of the NZ Space Agency. Even Xero, the startup that was famously bootstrapped from a Wellington apartment, has received several research and development grants.

Business success is often described as an individualist endeavour but the reality is that these companies have been supported by New Zealand taxpayers and investors for years. That support has largely paid off – investors have enjoyed strong returns for many years, and the public has benefitted from new jobs, higher productivity, essential services and national pride. But even high-upside investment comes with risk, and right now, retail investors are the ones absorbing it.