While brick-and-mortar retailers such as Costco Wholesale Corp. (COST) and Target Corp. (TGT) made a comeback in 2018, the world's largest retailer, Walmart Inc. (WMT), is still down in correction territory from its 52-week high, as investors remain concerned over the rising dominance of Amazon.com Inc. (AMZN) across new markets such as grocery and health care. Many bears on the Street recommend investors stay far away from shares of the Bentonville, Arkansas-based retailer, down 12% year-to-date (YTD) compared to the S&P 500's 4.3% gain. (See also: Walmart, Target Can Compete Vs. Amazon: O’Leary.)

In an interview with CNBC's "Trading Nation" on Tuesday, Cowen & Co.'s David Seaburg, the head of sales and trading at the investment firm, warned on the significant amount of cash Walmart will need to spend in the fight against the Seattle-based cloud computing and e-commerce behemoth.

"Investors are really not appreciating how much of a spend it’s going to take to really compete within the e-commerce space,” said Seaburg. “The expense that they’re going to have to incur to get the scales is absolutely going to have an impact on margins, and I think that’s the part that people are just missing.”

WMT Is Not Just About Top-Line Acceleration 

'Walmart's desperation to compete against Amazon has led it to spend billions on building out its e-commerce business and speedy delivery service. Earlier this year, the firm shelled out $16 billion on the acquisition of leading Indian online retailer Flipkart. In 2016, Walmart spent $3 billion to buy the online platform Jet.com. This week, the firm announced plans to open up a fulfillment center in the Bronx for its e-commerce site, pushing hourly delivery in the New York City area to rival Amazon's free two-day delivery for Prime members. 

While Amazon's investors have been patient with its leader, Jeff Bezos, allowing the firm to spend large amounts of capital in new markets in exchange for the prospect of long-term revenues, Seaburg indicates that Walmart investors are "not in this story for just top-line acceleration." Instead, they are in it for earnings growth, said the analyst. "The investors at Walmart, in my opinion, aren’t going to stand by this stock for too long unless they can really continue to show the earnings growth,” said Seaburg. 

Susquehanna's Stacey Gilbert also chimed in on the CNBC segment with a bearish outlook for Walmart. “There is very little activity that’s showing any sort of trend, anything of interest,” she added. (See also: Amazon Buys PillPack—Rx Chain Stocks Lose Billions.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.