Why the A2 Milk (ASX:A2M) share price is under pressure in 2021

The A2 Milk Company Ltd (ASX: A2M) share price slumped to a 52-week low on Friday as the Kiwi dairy group’s valuation slid lower.
The post Why the A2 Milk (ASX:A2M) share price is under pressure in 2021 appeared first on The Motley Fool Australia. –

A2 Baby formula shares

The A2 Milk Company Ltd (ASX: A2M) share price is under pressure in 2021. Shares in the Aussie milk company are down 27.5% this year and continue to slide lower.

There have been a few key factors driving the share price lower including the coronavirus pandemic, China sales channels and New Zealand recession fears.

Slowing China sales put A2 Milk share price under pressure

A2 Milk has been one of the top performers in the S&P/ASX 200 Index (ASX: XJO) for a number of years.

One contributing factor to this has been the success of A2 Milk products in the daigou sales channels. Daigou refers to cross-border exporting of goods, where individuals send a product (like A2 Milk infant formula) from overseas back to China.

Daigou channels have helped A2 Milk to capture significant market share in the Asian market. However, slowing sales combined with increased trade tensions between Australia and China have put the A2 Milk share price under pressure this year.

Shares in the Kiwi dairy group continued sliding to a new 52-week low last week. That came as fears of a New Zealand recession reared their head during the week.

According to the New Zealand Herald, a slow vaccine rollout, further threats of lockdown and continued border closures are putting economic growth under pressure and worrying investors.

The A2 Milk share price fell as low $8.33 per share on Friday – a new 52-week low. That is a far cry from the $20.05 per share valuation seen as recently as July 2020.

Foolish takeaway

The A2 Milk share price has been under pressure in 2021 after a tearing run in the last five or so years. Investors will be watching closely to see if the company’s valuation continues to slide in 2021.

The company’s shares closed at $8.45 per share on Friday with a $6.3 billion market capitalisation.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and 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.

The post Why the A2 Milk (ASX:A2M) share price is under pressure in 2021 appeared first on The Motley Fool Australia.

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