The A2 Milk Company Ltd sinks further after Nestle Illuma launch

Shares in The A2 Milk Company Ltd (ASX: A2M) are down 5% at the time of writing to $11.48 on the third day of falls for the S&P/ASX 200 star stock.

A2 Milk shares have rocketed up in the last 12-months, with today’s price still 333% above its share price of $2.70 at this time last year, but it appears news out of Nestle about the launch of its Illuma product is weighing heavily on investor’s minds.

Nestle’s new infant formula product uses the same A2 beta-casein protein that A2 Milk has built its success upon, with Illuma already on the shelves in China.

Another player in the competitive infant formula space, Jatenergy Ltd (ASX: JAT) has seen its share price zoom up from 0.016c per share at this time last year to its 26c per share price at the time of writing as investors pounce on the stock as if it was the next Bellamy’s Australia Ltd (ASX: BAL).

Jatenergy announced an agreement with Chinese distributor Jbingo this week to distribute the company’s 51%-owned Golden Koala formula range.

Investors unaccustomed to falls in A2 Milk share price will likely be spooked by the drop, but the $8.79 billion market cap company retains strong growth potential and solid fundamentals.

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Motley Fool contributor Carin Pickworth 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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