In these modern times -- where we get our news, opinions and entertainment over the Internet and we no longer measure stocks using fractions -- the P/E is less a measure of valuation, more a gauge of investor confidence in things like management, the business model and the pace of and reasons for reinvestment of capital.
Sure, you'll get things like P/E contraction. Day and swing traders will have their chance to short AMZN -- like all stocks -- and make money. But, from a long-term perspective, none of this matters.
Listen to Jeff Bezos when he tells you margins don't matter to investors, free cash flow does. He's not pulling this stuff out of his ear. People with substantial money in AMZN likely have his ear.
Listen to Bezos when he tells you -- over the course of 13 to 14 years(!) -- that he does not manage the stock price. Instead, he focuses solely on visualizing his company's long-term opportunity and investing accordingly. That's what Amazon has always done, is doing now and will continue to do.That uncomfortable P/E actually should make you quite comfortable, assuming you're a long-term investor not sensitive to noisy day-to-day or even month-to-month, quarter-to-quarter price shocks. That old-school valuation metric tells you that the big money believes this thing is poised to make good on its investment in its future. Whereas Netflix (NFLX - Get Report) to $300 in 2011 was a case of misguided Wall Street analysts propping up a house of cards, AMZN of 2012-13 absolutely is a story Wall Street got right. They're not about to be wrong anytime soon. Amazon is fixing to dominate the world. Hard to imagine considering the level they're at now and the feeble competition. Retailers who chase the very model that crushed them by reacting with rank-and-file answers such as price matching and free popcorn. So if you're part of this vocal minority of AMZN haters, stop it. This is not only a great company, it's a great stock led by an superb management team. Hating AMZN is as difficult for those of sound mind to comprehend as trashing Apple (AAPL - Get Report). Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.