The A2 Milk Company Ltd (ASX: A2M) share price has been a surprisingly poor performer over the last couple of months.

Since peaking at $19.23 in the middle of April, the fresh milk and infant formula company’s shares have been creeping lower.

Today they are changing hands for $17.65, which means they are now down over 8% from their high.

As a comparison, the S&P/ASX 200 Index (ASX: XJO) is up over 10% during the same period.

Why has the a2 Milk share price been underperforming?

There are a couple of reasons for its underperformance during the last two months.

The first is the outperformance of the a2 Milk share price in the months before it reached its all-time high. This is evident in its year to date gain of approximately 26% compared to a 10.5% decline by the ASX 200.

Investors were scrambling to buy the company’s shares during the first few months of 2020 due to speculation that its sales in China were on fire because of panic buying. This proved to be the case in April when a2 Milk Company released a trading update and upgraded its guidance.

However, with this already priced into its shares, the buy side soon ran out of steam and its shares began to slide.

What else is weighing on its shares?

In addition to this, recent data out of China isn’t overly positive for a2 Milk Company.

According to Goldman Sachs’ latest China Consumer Connections, the company’s online sales underwhelmed during the month of May.

After months of explosive sales growth, the broker estimates that a2 Milk Company’s sales on Chinese ecommerce platforms fell 1% in May compared to the same period last year.

In light of this, it believes its online market share in China has fallen from upwards of 9% in March to 6% in May.

This appears to have been driven by market share gains by local infant formula companies. This is particularly the case with Feihe International’s Firmus infant formula, which has been winning market share at a rapid rate.

Should you be concerned?

I think it is a bit early to be concerned by its recent online market share losses. Especially as it has a tendency to be reasonably volatile. But it will be worth keeping an eye on things to see if there are any negative trends forming.

For now, though, I continue to see a2 Milk Company as a share to buy.

More reading

• How the A2 Milk and Bubs share prices have performed during the pandemic
• 2 ASX shares I’d buy if the ASX crashes again
• 3 top ASX shares to buy now to get rich later
• 3 companies with great intangible asset moats
• Will ASX 200 shares hit a record high in June?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The S&P/ASX 200 Index (ASX: XJO) has suffered a bit of a selloff today. It’s down by almost 3% at the time of writing.

That’s a pretty rough day. This much of a decline has been rare since the original coronavirus crash during March 2020.

I think today’s ASX 200 selloff tells me a number of things:

Investors are still jittery

The way the market has been recovering since March 2020 made it seem as though everyone was confident the economy will rebound fairly quickly.

But today’s selloff shows that some investors are nervous. The share market doesn’t fall 3% when everyone is feeling bullish at the current share prices.

Looking at some of the biggest declines, the National Australia Bank Ltd (ASX: NAB) share price is down 5.6%, the Australia and New Zealand Banking Group (ASX: ANZ) share price is down 6.2% and the Westpac Banking Corp (ASX: WBC) share price is down 6.6%. It seems the share market is not through the volatility yet.

Comments by officials can still have a big effect on the ASX 200

Today’s selloff was supposedly caused by the Federal Reserve’s Jerome Powell. He essentially said that the US economy probably isn’t going to rebound in a quick V-shape.

According to the Australian Financial Review, Mr Powell said: “This is going to take a whole lot of time. There are just a lot of people that are unemployed and it seems quite likely there will be a significant group, even after a lot of strong jobs growth, that will still be struggling to find jobs.”

In my mind, I thought that it was already established that (US) employment wasn’t going to bounce back to pre-COVID-19 levels rapidly. But apparently that’s new information to some investors.

The ASX 200 is influenced by the outlook for the underlying earnings of the shares. The US economy’s performance is important for Australia. The US share market is very important for investor confidence in the ASX 200.

It may still be possible to pick up some investment bargains

Who knows how long or deep this selloff will be? The dip could just be today and bounce back tomorrow. Or it could be the start of another decline.

Investors who have been disappointed about missing the bottom of the ASX 200 selloff may be getting another opportunity to buy cheaper shares. I’m certainly interested in buying if things go lower.

I don’t think today’s decline is worth jumping on, but if the selloff continues into next week then I’ll start putting some money to work again.

More reading

• Fundie sees trouble ahead for ASX bank dividends
• Why Afterpay, Amcor, Computershare, & Westpac shares are dropping lower
• ASX bank share prices tumble as they aren’t out of the COVID-19 woods yet
• ASX 200 drops 2%: Big four banks sink lower, JB Hi-Fi to deliver strong profit growth
• My share investing journey during the pandemic

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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