A2 Milk Company Shares Plunge after CEO Sells Shares

By ,

At time of writing, shares of the a2 Milk Company [ASX:A2M] are down 3.45% to $10.91.

This marks one of the sharpest downturns for the stock in the last three months.

It also flies in the face of its strong growth over the last year.

The a2 Milk Company has more than doubled in value over the past year, with a 52 week high of $13.78 from a low of $5.48.

Signs of worry for a2 Milk

trading view a2milk


This comes on the back of strong growth in demand for milk powder products in China.

However, there are some worrying signs for a2 in the air.

For starters, just two months into her job the CEO of a2 has sold off large chunks of shares.

Insider sentiment is tricky to judge, and is not always a reliable indicator.

But given that the insider is a top executive, and the sale is so significant, there might be cause for concern.

Free Report: Discover four red hot ASX profit plays for 2018. Read Now.

Big Insider Sell Off

CEO Jayne Hrdlicka sold $4 million in stock last week.

Another thing to consider is that the a2 Milk Company’s Price/Earnings (P/E) ratio has blown out to 46.8.

At a basic level, the Price/Earnings ratio is a measure of how many dollars you need to invest to get one dollar of the company’s earnings.

The average P/E ratio for most stocks sits between 20 and 25.

For tech stocks, high P/E ratios are relatively normal. Tech stocks are often traded on future earnings growth and hype around new product roll-outs.

But a2 is not a tech stock.

It’s a stock that has relatively stable demand for its product.

People who buy milk tend to buy it regularly.

The last truly massive innovation in milk was pasteurization.

In the US for instance, milk sales have fallen by 7% with increased competition from plant-based milks and juice.

Australia may soon replicate this trend with various milk alternatives available at your local café.

Combined with the recent sale of stocks by the CEO, trends such as these leave the a2 Milk Company looking somewhat shaky.

It may perhaps be wise to look elsewhere for stronger returns.


Ryan Clarkson-Ledward,

For Markets & Money

PS: Beginners Guide: Easy-to-read instructions on the steps you need to take to successfully jump into the ASX TODAY. Sign up now, it’s free!

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor…

a2 Milk Share Price Sinks 11% on New Strategy (ASX:A2M)

‘Unprecedented change’ in the China infant formula market over the last 12 months led a2 Milk to alter its growth strategy, setting a medium-term goal of hitting NZ$2 billion in sales. a2 Milk Company [ASX:A2M] share price is currently trading for $6.09 a share, down 11%.

Bubs Share Price Soars 30% on Rebounding First Quarter Sales (ASX:BUB)

Bubs Australia Ltd [ASX:BUB] share price was up a significant 30% at time of writing. Despite the big jump, the infant formula stock is still down 40% over the last 12 months.

a2 Milk Share Price Falls on Class Action News (ASX:A2M)

The A2M share price tumbling 6%. The a2 Milk Company Ltd [ASX:A2M] is set to face a class action lawsuit led by Slater and Gordon on behalf of unhappy shareholders.

Bubs Launches in the US, Share Price Jumps 25% (ASX:BUB)

The Bubs Australia Ltd’s [ASX:BUB] share price are up 26% after BUB’s infant formula range goes live on Walmart.com. BUB shares spiked as high as 32% in early trade.

What Does China’s Child Policy Mean for Bubs Share Price? (ASX:BUB)

After soaring on Tuesday, Bubs Australia Ltd’s [ASX:BUB] share price is currently down 7% today as the market assesses China’s child policy…

What Is A2 Milk Share Price Worth? (ASX:A2M)

A2 Milk Company Ltd [ASX:A2M] share price continued their recent fall, with major brokers revising their price targets. The A2M share price is currently trading 70% below its 52-week peak…