Commonwealth Bank Stock Drop Wipes $30 Billion From CBA
Commonwealth bank stock drop erased nearly $30 billion in value on Wednesday after the lender's shares fell 10 per cent. The fall came even as Commonwealth Bank reported quarterly profit rose 4 per cent to $2.7 billion. Investors who had treated the stock like a market leader were left facing a sharp reset.
Filip Tortevski on CBA
Filip Tortevski, a senior analyst at Wealth Within, said the move was bigger than a one-day selloff. “The cracks for me are starting to appear, structurally, more so than just the one day move,” he said. He added that CBA started to act like a tech stock since 2020, a shift that helped push valuations far beyond what many analysts expected.
Last year, CBA hit $190 a share and traded at more than 33 times earnings. Tortevski said the current move was closer to a re-rating than a one-off shock, with money flowing into the same large stocks based more on momentum than on real valuations. That leaves the stock vulnerable if the market keeps pushing it back toward long-term growth rates.
Bad-debt provisions at CBA
Wednesday's update also showed Commonwealth Bank increasing provisions for bad debts. That move came alongside the 4 per cent profit rise to $2.7 billion, creating a mixed picture for shareholders: stronger quarterly earnings, but a more cautious stance on credit conditions.
Tortevski said the same pattern is showing up in other high-valued names, including CSL and Cochlear, both of which have fallen more than 65 per cent from their highs in the past year. He said ballooning superannuation funds and popular ETFs have helped funnel money into ASX megacaps, concentrating gains in a narrow set of stocks. For CBA holders, that concentration cuts both ways when the unwind starts.
$100 to $95 per share
Tortevski said a sustainable rate of growth would put CBA between $100 and $95 per share on the way down. He also said a 50 per cent decline from the recent highs was around the corner for Commonwealth Bank shareholders this year. “At some point the market's going to realise this and reset itself. And I think we’re potentially at the start of that now,” he said.
If that reset keeps spreading through the banking sector, the immediate focus shifts from the size of Wednesday's loss to how far the valuation can fall before buyers treat it as a normal earnings multiple again. For investors, the question is not whether CBA can still earn money — it just posted $2.7 billion in quarterly profit — but what multiple the market is willing to pay for it next.
