US President Joe Biden and First Lady Jill Biden. Photo / AP
A2 Milk's share price has been in the doldrums for months.
Until today.
By early afternoon the stock was up 54c or 11.5 per cent at $5.23 on higher than normal volume.
The reason?
US President Joe Biden said in a message on Twitter on Friday that 27.5 million bottles of formula was on its way to the United States from ASX-listed Bubs to help out with the formula shortage there.
I’ve got more good news: 27.5 million bottles of safe infant formula manufactured by Bubs Australia are coming to the United States.
— President Biden (@POTUS) May 27, 2022
We’re doing everything in our power to get more formula on shelves as soon as possible.
When trade opened this morning, Bubs' share price rocketed up to A72c from A49c in response to the news.
A2 Milk - often seen as being in the same cohort as Bubs in as much as their product is outsourced - was caught up in the excitement.
"Bubs is sending infant formula on a jet plane to the US to help out with the shortage," Harbour Asset Management senior analyst Oyvinn Rimer said.
"I think we are seeing a sympathy response in a2 Milk," he said.
"A2 Milk is piggy-backing on that story."
The US infant formula industry is dominated by just four big players.
Last week, the US started taking product from Germany under the Biden administration's Operation Fly Formula programme.
The US shortage has been exacerbated by the closure of formula maker Abbott Nutrition's plant in February after the plant failed several inspections from the US Food and Drug Administration.
A2 Milk's share price has in recent days had a $4 in front of it, sinking to $4.67 last week.
The share price peaked at $21.51 in July 2020.
A2 Milk's managing director and CEO David Bortolussi said a2 Milk had submitted an application to the US Food and Drug Administration (FDA) last week under the temporary enforcement discretion to supply infant milk formula.
He said a statement that a2 Milk was standing by to assist the US government, FDA and trade partners to help parents and caregivers gain access to infant formula, subject to stock availability.
"We are able to provide support as one of the leading international infant milk brands, leveraging our existing US presence and distribution capability," he said.
The company supplies its milk - such contains just the beta protein and not the combination of a1 and a2 contained in standard milk, to about 27,000 stores in the US.
The company's share price has been under downward pressure after its once explosive earnings growth fell to more sedate levels due to Covid-19 disruption of the unofficial daigou trade channel, which has been an important part of a2 Milk's business model.
Increased competition in China - a2 Milk's biggest infant formula market - has also been a factor.
In its latest result, a2 Milk's net profit dropped by 53.3 per cent to $56.1 million in the first half to December, following on from a 79 per cent slump in its earnings in the year to last June.
The near-collapse of the daigou trade in formula from Australia to China meant millions of dollars worth of stock nearing its use-by date had to be destroyed.