Why the Kiwi dairy group’s shares have been hammered in 2021…
The post It’s been a bad year for the A2 Milk (ASX: A2M) share price. Here’s why appeared first on The Motley Fool Australia. –
The A2 Milk Company Ltd (ASX: A2M) share price was previously the darling of the S&P/ASX 200 Index (ASX: XJO). Shares in the Kiwi dairy company climbed nearly 1,000% from July 2016 to July 2020.
But it’s been a tough time for investors since then.
The A2 Milk share price has plummeted more than 64% lower to $6.89 per share in the last 12 months, hitting a 52-week low of $5.04 in May 2021.
So, what’s driving these recent share price losses for one of the previous ASX market darlings?
Why the A2 Milk share price is down 64% in the last 12 months
Perhaps unsurprisingly, the coronavirus pandemic hasn’t helped A2 Milk. The Kiwi company generates a significant proportion of sales from daigou sales channels. Daigou is the cross-border exporting of goods from outside China for resale and consumption in China.
Restrictions on travel and increasing problems with inventory management have spurred multiple A2 Milk earnings downgrades. That’s spelled trouble for the A2 Milk share price which has been tracking lower since July last year.
The announcement in August 2020 that senior executives were selling down certainly didn’t help. Millions of dollars worth of company shares were sold by the Chairman, CEO, COO and others in August which triggered a further share price decline.
It’s been a dramatic fall for a company that had long been seen as a growth success story. Shares in the Kiwi dairy company have, however, lifted off their recent lows in July.
Clearly, the A2 Milk share price has struggled in the last year or so. Early investors in the company would still be sitting on a paper gain even at the current levels.
It’s also not all doom and gloom for investors. The Kiwi dairy group’s shares have actually gained 10% in the last month after closing at $6.89 per share on Tuesday.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.