For the first six months of 2025, it seemed as though Commonwealth Bank of Australia (ASX: CBA) shares could do no wrong.
CBA started 2025 at $153.57 a share. Over the coming months, the ASX 200 bank stock would go on to hit multiple new all-time highs, culminating in the current record of $192 a share that we saw hit back in late June.
However, since then, things have not been nearly as spectacular for the ASX's largest bank stock (and stock, period).
Not only did the new records stop, but CBA shares went into reverse. Since that late June high watermark, the bank has dropped by around 12%. At the time of writing, it is sitting at $196.77 a share.
Of course, this situation is far from dire for CBA investors. The bank remains up 10.5% in 2025 to date, as well as up 23.5% over the past 12 months. But even so, we have certainly seen a change in the wind when it comes to Commonwealth Bank.
So what's next for this beloved ASX blue chip?
Well, to answer that, let's start by discussing the earnings report that CBA dropped back on 13 August.
As we covered at the time, this was a decent, if unspectacular, earnings report by most counts.
CBA reported a 7% rise in statutory net profit after tax to $10.13 billion for the 12 months to 30 June 2025. Cash net profit after tax rose 4% to $10.25 billion, while investors got a final dividend bump to $2.60 per share. Total dividends for 2025 were $4.85 per share, fully franked, a rise of 4% over 2024's levels.
CBA shares fell 5.4% on the day these earnings were released and remain around those levels today.
So, where to from here?
What's next for CBA shares?
Well, the problem with CBA, at least in my view, is that investors became detached from reality. CBA is a fine company. It is arguably Australia's best-run bank, with a massive, loyal customer base. The problem is that it struggles to grow these days, given its massive size. Commonwealth Bank has not posted anything better than single-digit earnings growth for years now.
In fact, its profits fell over FY2024.
Yet, over the past two years, CBA shares have exploded 70% higher. And that's going off today's share price, not June's.
Legendary investor and Warren Buffett mentor, Benjamin Graham, once famously said that 'in the short run, the market is a voting machine, but in the long run, it is a weighing machine'.
Investors have spent the past few years voting CBA higher, spurred by the bank's status as a safe haven store of value, and a bit of profit-seeking to boot.
But now, the chickens might be coming home to roost. CBA could not continue to rise in value forever if its profits weren't keeping up. They haven't been, and investors seem to be realising it.
I don't have a crystal ball, so I can't tell you what CBA will do from here. But I would not be surprised to see this bank stock tread water for weeks and months ahead, if not fall even further away from that $192 high. Let's see what happens next.
