Commonwealth Bank of Australia (ASX: CBA) shares are trading in the red again on Tuesday.
At the time of writing, the ASX bank shares are down 0.74% to $170.94 a piece. Today's slide means the shares have now shed 7% of their value since peaking at an annual high of $183.52 in mid-April.
CBA shares are now up 6% for the year to date and are 2% higher than this time last year.
Many investors are now questioning whether the bank's shares will continue to slump. Or could there be more to come later this year?
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Is there an upside ahead?
It's been the consensus for some time that the bank's shares are overvalued relative to its peers, and that its bumper price tag isn't supported by the bank's business fundamentals.
Market Index data shows brokers still rate CBA's shares as a strong sell. The brokers tip a potential downside of 24% to an average $129.82 12-month target price, at the time of writing.
TradingView data shows some analysts are even more bullish. Out of 16 analysts, 14 have a sell or strong sell rating on the stock. Some think the shares could crash up to 47% to as little as $90 each over the next 12 months.
If analyst predictions are anything to go by, we can assume that the peak has well and truly passed for CBA shares.
But potential upsides and predicted share price targets aren't the only reasons investors should consider when thinking about selling their CBA shares.
CBA is a classic passive income stock
Bank stocks are generally considered cyclical rather than classically defensive, but large-scale banking giants like CBA certainly have defensive qualities.
Banking and credit are usually seen as an essential service. This means the sector can remain relatively stable in times of economic volatility.
As a result, banks like CBA are able to record a consistent operational performance and earnings, even when markets are mostly weak. CBA's latest results announcement was its unexpectedly positive half-year FY26 result in mid-February.
The bank is huge, dominant, and highly profitable, which means investors generally consider it a safe haven when markets are unstable. Scarcity of quality stocks on the ASX also means investors tend to put major players, like CBA, on a pedestal.
The bank is able to pay a good dividend to its shareholders, too. Its latest payment was a fully-franked $2.35 per share dividend in late-March, which implies a dividend yield around 2.74% at the time of writing.
So, should I sell my CBA shares in May?
It looks like CBA shares are on the way down. If the crash is as large as the experts expect, the drop could also affect the level of passive income that the bank pays its shareholders.
Ultimately, selling CBA shares should depend on how many you hold and how long you expect to keep them for. If you rely on dividend payments, this should also be taken into account.
Also keep in mind that ASX bank stocks are cyclical, so even a near-term decline could rebound in the mid-term. I personally wouldn't buy into CBA shares right now, but I'd think twice about selling up this month.
