With Amazon's stock (AMZN) sucking wind these past 12 months, one Wall Street analyst says it is time the tech giant improves upon its disclosures as a means to alleviate investor concerns over profit margins.
"It's time for more disclosure from Amazon, this time into its $19 billion spent per year on engineering," said Morgan Stanley tech analyst Brian Nowak.
Nowak's research shows those tech companies that have worked to improve their disclosure practices have seen their trading multiples expand these past five years, supporting a higher stock. The analyst thinks the time for Amazon to share more on its spending is now as the stock has lagged shares of rivals Alphabet, Meta, Microsoft and Apple in the past 18 months.
Nowak pins the blame on concerns around "decelerating growth, retail share loss, labor costs, the durability of retail top-line growth, and profitability. Not making matters any easier for Amazon is the broader sell-off in tech stocks on concerns about higher interest rates this year (high multiple tech stocks generally hate higher interest rates)
"Better visibility into Amazon's estimated ~$19 billion spent on engineers per year (excluding AWS) and emerging, 'other bets' projects could help investors better understand the health of its core retail business," Nowak added.
Nowak reiterated an Overweight rating on Amazon (Buy equivalent) with a $4,200 price target.
Amazon's stock is down 1% for January, compared to a 3.6% drop for the Nasdaq Composite's.
Zoom out and the performance is far uglier.
Shares are down 11% from their peak on July 8, otherwise known as a correction (decrease of 10% off the highs).
Meanwhile, the stock is the worst performing component of the closely watched FAANG (Facebook/Meta, Amazon, Apple, Netflix, and Google) complex over the past 12 months, notching a 6.3% advance.