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.
