The A2 Milk share price plunged 15% in April. What went wrong?

milk asx share price falling represented by sad child with glass of milk

milk asx share price falling represented by sad child with glass of milk

It was a good April for the S&P/ASX 200 Index (ASX: XJO)… until this week. Between 31 March and last Thursday, the ASX 200 managed a rise of 1.2%.

But after this week’s turbulence, the ASX 200 is now looking at a 1.3% loss for the month. But that’s nothing compared to the A2 Milk Company Ltd (ASX: A2M) share price.

A2 Milk shares have now fallen by roughly 15.5% over April. But unfortunately, the company wasn’t doing too well before April either. In 2022 so far, A2 Milk shares have lost close to 21% of their value. Over the past year, those losses stretch to almost 40%.

But let’s focus on April. So what’s gone so wrong for A2 Milk over the past month or so?

Why has the A2 Milk share price emptied the tank in April?

Well, this company has been struggling with the same issues for a while now. These include tightening margins on its products, supply chain issues and difficulties with the formerly lucrative Chinese market.

Investors have known about these issues for a while, but perhaps many were hoping that 2022 would show an improvement in the headwinds facing A2 Milk.

But the earnings report that was delivered back in February seemed to confirm many of these concerns. A2 reported a nasty 53.3% drop in net profits after tax (NPAT). To make matters worse, management said that it was still facing headwinds in the Chinese markets, not to mention margin pressures.

So investor sentiment seems to have been cooling ever since this earnings release. Since we haven’t heard much in the way of good news over April, it seems the company is still facing selling pressure. So this could be why A2 Milk shares had such a nasty April. No doubt investors will be hoping for a turnaround next month. But we shall have to wait and see.

At the current A2 Milk share price, this ASX 200 share has a market capitalisation of $3.25 billion.

The post The A2 Milk share price plunged 15% in April. What went wrong? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in A2 Milk. 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 Scott Phillips.

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