Shares of (NASDAQ:AMZN) opened at a new all-time high this morning.

This is important, because the leading online retailer has been in the crosshairs of valuation-minded skeptics for years. Bears love to point out how Amazon trades at lofty P/E multiples. They draw rings around the low margins, competitive landscape, and state sales-tax challenges that threaten its dominance.

In other words, naysayers have been warning investors to stay away from Amazon for years. The significance of the all-time high, therefore, is that every single bear is, at least for the moment, dead wrong.

The further back you go, the lower the price points where Amazon bashers thought the stock would peak before fading away.

They were wrong then. They're wrong now. They'll probably be just as wrong tomorrow.

Where the wild things are
Friend and fellow Fool Rich Duprey became the latest Washington General to go toe-to-toe with the Amazon globetrotter.

"Amazon's price is no gift this holiday season," he writes.

Beyond the valuation concerns, he's worried that Wal-Mart (NYSE:WMT) and eBay (NASDAQ:EBAY) will eat into Amazon's perpetually expanding market share. There's just no evidence that this will happen. It's not as if a light bulb went off last month in the Wal-Mart and eBay boardrooms, with the big shots suddenly realizing that they'd somehow overlooked the potential of online holiday shoppers. Wal-Mart is always triggering price wars, and it ends up denting mostly its real-world rivals. eBay's been around as long as Amazon has, and its domestic marketplace revenue has been declining for several quarters now.

Rich also fears that Sony (NYSE:SNE) and Barnes & Noble (NYSE:BKS) will eat into Amazon's Kindle business, even though Amazon just announced that November was a record month for Kindle sales. Don't buy into B&N's shipment delays on its Nook as a sign of demand as much as a disruption in supply. Either way, Kindle gets that much more time to pad its e-book lead.

Conservatively speaking
Most of Rich's bearish argument is just and reasonable -- he is a sharp cookie, after all -- but then he blows it by making one critical mistake in modeling the company's growth projections.

"If we say Amazon can grow earnings at 20% annually for the next five years (analysts predict 25%, but let's be conservative) it will generate profits of almost $1.9 billion at the end of 2014," he writes.


Let's go over Rich's first mistake. Have analysts been aggressive in the past in targeting Amazon's growth? Is a haircut warranted?

Of course not. Amazon has beaten analyst quarterly guesstimates in each of the past seven quarters. If anything, the truly "conservative" call would be to raise the targets of the serial-lowballing pros.

In its latest quarter, net sales grew by 28%. Wall Street was expecting profits to climb by merely 22%, but Amazon delivered 68% bottom-line growth. So, we're really going to discount the analysts who have consistently been underestimating Amazon's potential?

The second mistake is that Rich arrives at $1.9 billion in earnings under his unfairly decelerated model. Well, Amazon's always been a company that's better measured by its free cash flow than reported (and, one would argue, potentially managed) earnings. And over the past year, Amazon has delivered $1.92 billion in free cash flow, so it has arrived at Rich's 2014 five years early.

Ho-ho momentum
The caveat is that infinity is not an option for capital appreciation. There may very well come a time when Amazon is, in fact, so overvalued that even the most ardent bulls get queasy.

However, the correct call for a definitive top in Amazon's stock is unlikely to come from the tired camp of bears who have been leaning on earnings-based multiples, ignoring Amazon's momentum in consistently topping expectations, and dismissing the company's digital initiatives that will expand margins at an even healthier clip than they're being widened at already.

Many of the original bear arguments centered around Amazon's maturation as a company. However, after seeing it grow faster than smaller -- and presumably nimbler -- online merchants including Blue Nile (NASDAQ:NILE) and (NASDAQ:DSCM), no one holds Amazon's girth as anything else than a virtue these days.

In time, the other bearish knocks will seem equally archaic.

See you back in a quarter. I'll meet you at the new all-time high.

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Longtime Fool contributor Rick Munarriz has been shopping online since the early 1990s, even before was around. He owns no shares in any of the stocks in this article and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.