Bubs Australia Ltd shares plunge almost 10% lower

The Bubs Australia Ltd (ASX: BUB) share price may have been one of the biggest movers on the market on Monday, but it was a very different story on Tuesday.

The goat milk infant formula and baby food company’s shares finished the day almost 10% lower at 75.5 cents.

What happened?

On Monday Bubs’ shares rallied approximately 30% after the release of a mixed first-quarter update and an announcement that its products have launched on the Chemist Warehouse’s Tmall store.

It appears as though investors have either decided that the buying frenzy yesterday was unjustified or are taking profit following the strong gain.

Yesterday Bubs posted first-quarter sales of $1.7 million, a 22% increase on the fourth-quarter of FY 2017.

While this is undoubtedly strong growth, whether it is enough to justify a lofty market capitalisation of approximately $207 million, only time will tell.

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Motley Fool contributor Motley Fool Staff has no position in any 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 Bruce Jackson.

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