The S&P/ASX 200 Index (ASX: XJO) is having a pretty bleak day on Tuesday. At the time of writing, the ASX 200 is currently down 0.89%, dropping to 7,515.30 points. However, one major ASX blue chip share is faring far worse today. That would be the Commonwealth Bank of Australia (ASX: CBA) share price.
CBA shares are currently down a hefty 3.16% so far today to $99.30. That represents a pretty dramatic drop for CBA, with the ASX 200's largest bank share hitting a new all-time high of $109.03 just last week. It also means CBA shares are now down around 9% from those highs. But things are not quite as dire as they might first appear.
The CBA share price drop today is likely occurring for the best of reasons. That being because the bank has just gone ex-dividend for its upcoming final shareholder payment. Investors holding the shares before today can expect the $2 per share payment on 29 August. But since this won't be paid to new investors from today, it's no longer built into the share price.
Furthermore, yesterday also marked the cutoff for existing investors to participate in CBA's share buyback program, which also could be a factor in today's share price slump
Today's slide back under the $100 mark comes following the euphoria that accompanied CBA's earnings report last week. CBA shares were lit on fire last week following the bank's earnings report. Investors were very excited when the bank announced a 17% dividend increase for FY21. As well as a new $6 billion share buyback program.
What else has been impacting the CBA share price lately?
In addition to it trading ex-dividend, there have been a few other developments in recent days that have arguably not been great for CommBank.
Firstly, some brokers started to describe CBA as overvalued following its big jump last week. As my Fool colleague James covered on Sunday, broker Credit Suisse downgraded Commonwealth Bank to 'underperform' following its earnings report, with a share price target of $95 a share.
Secondly, my Fool colleague Bernd covered how CBA is facing increasing competition from smaller, digital lenders in the profit-laden home loan mortgage market. Bernd analysed a report that looked at how emerging fintech companies could be "nibbling away at the edges of [CBA's] lucrative mortgage market".
CBA remains dominant in the Australian mortgages market. But rising competition is usually not good news for a market leader.
Finally, and also as The Motley Fool covered at length, CBA is also facing a potentially embarrassing situation in regards to its Federal Court-imposed $7 million fine earlier this year. As Tony covered yesterday, the Court has just ordered CBA to publish "both a written and audio-visual mea culpa" on both its website and newsroom that it had intentionally misled customers when it overcharged interest on overdraft accounts.
This notice is to be titled 'Notification of misconduct by CBA' and will be live for at least 90 days. Not exactly a proud moment for the bank, one could say.
So it's possible that these factors, together with the general market malaise we see today, could also be contributing to a lower CBA share price this Tuesday.
At the current CBA share price, this ASX bank has a market capitalisation of around $181.7 billion, a price-to-earnings (P/E) ratio of 21.05, and a trailing dividend yield of approximately 3.5%.
