Amazon’s stock (AMZN) has been stuck in the penalty box for most of 2021 as investors see what new CEO Andy Jassy has up his sleeves and the company’s growth slows after a big 2020 as people shopped more online at the height of the pandemic.
Veteran tech analyst Mark Mahaney of EvercoreISI thinks Amazon’s stock has a ways to go before it begins a sustained upward ascent.
“Amazon’s stock is waiting for an unlock,” Mahaney said on Yahoo Finance Live. “Amazon is going into another investment cycle, particularly related to retail infrastructure and distribution. They are really trying to lock in one-day delivery, and what I call super same day delivery. If they can show that they can get a return on that, which I think they will and will show accelerated spending from customers, then investors will look beyond near-term margin pressure and the stock still go up. That’s what we are waiting for, and we’ll get that unlock some time in the next six to 12 months.”
The pressures on Amazon’s stock as investors weigh its investment cycle outcomes are pretty evident.
Amazon shares are up a mere 5% year-to-date, badly lagging the double-digit gains for the Dow Jones Industrial Average, Nasdaq Composite and S&P 500.
The stock is also the worst member of the closely tracked FAANG [Facebook, Amazon, Apple, Netflix, Google] complex. Top-performing Google has notched a 62% gain year-to-date as investors have been impressed with growth at YouTube and in cloud services.
Zooming out on a Yahoo Finance Plus chart, Amazon’s stock has basically flat-lined since early July 2020. From March 2020 (height of the pandemic hysteria and lows for the broader stock market) to July 2020, the stock had appreciated some 68% as traders braced for a major acceleration in Amazon’s growth.