Bearish sentiment for Wal-Mart Stores (NYSE:WMT) has increased over the past few months, which is indicated by a 54.3% increase in the short position on the stock since October. Most of these people likely turned bearish because Wal-Mart announced that its customers weren't spending as much as they had in the past. However, you might not want to read into this statement too much.

First off, any sell-offs in the stock related to that news likely have already taken place. Second, the data breach at Target (NYSE:TGT), its closest brick-and-mortar competitor, will likely lead to market share gains for Wal-Mart, especially since Target sees a 2.5% comps decline year over year, much weaker than the previous expectation of comps coming in flat. Third, despite Amazon.com (NASDAQ:AMZN) maintaining a clear advantage in online sales, Wal-Mart still has a massive amount of capital available, some of which will be used in an attempt to catch Amazon online.

Unrealistic dreams?

Wal-Mart's expected online sales for 2013: $10 billion. Not bad, but still nothing compared to Amazon, with expected online sales for 2013 of $74 billion. Given these numbers, it might seem inconceivable that Wal-Mart has any chance whatsoever of catching Amazon as the No. 1 online retailer in the world. One thing is for sure, Wal-Mart is the clear underdog, especially since Amazon's technology allows it to change prices 2.5 million times per day, giving it a substantial price advantage over Wal-Mart.

In other words, Amazon can better target the value-conscious consumer with adjusted lower prices on specific products. Wal-Mart's price changes in November: 52,956. It's unlikely this number has changed much in comparison to Amazon.

But there are still several reasons not to underestimate Wal-Mart.

Aggressive planning and deep pockets

Wal-Mart plans on spending $0.10 per share on e-commerce development in 2014. The majority of this capital will likely go to investments in technology labs. Most people don't know this, but Wal-Mart has purchased eight technology labs over the past three years. These labs have produced several quality innovations, including a Social Genome product that collects data from social-media sites for information. This product allows Wal-Mart to see what millions of their customers are talking about online. It can then use this information for better merchandising and marketing.

Wal-Mart can also inform its customers, or family and friends of its customers, about discounts on select items. Another success is the Crowd-Sourcing Project, through which customers can vote for products they want to see on Walmart.com. This is in addition to mobile apps.

Additionally, Wal-Mart wants to find a way to offer same-day delivery for products purchased online. But it must plan carefully to avoid any significant hits to margins. At the moment, in-store pickup is a positive for Wal-Mart, because it sometimes leads to customers shopping in the store. This then leads to increased sales.

As far as online performance, Amazon.com currently has a global traffic ranking of 8 and a domestic traffic ranking of 5. Walmart.com has a global traffic ranking of 140 and domestic traffic ranking of 31. The good news for Wal-Mart is that it's performing well online.

For instance, over the past three months, the bounce rate (where a visitor views one page and leaves) has declined 5% to 29.6%, page views-per-user has increased 12.1% to about 6.7, and time-on-site has improved 8% to 5:48.

That's the good news. The bad news is that Amazon.com, despite its online lead, is growing even faster. Over the past three months, the bounce rate has dropped 29% to 28.2%, page views-per-user has increased 30.6% to 11.1, and time-on-site has improved 38% to 9:17. These are astronomical numbers.

For the record, Target.com has a global traffic ranking of 241 and a domestic traffic ranking of 52. Over the past three months, the bounce rate has increased 2% to 30.3%, page views-per-user has slipped 1% to 4:9, and time-on-site is flat at 4:29. Nothing to panic over, but not impressive.

Other factors to consider

Even if Wal-Mart can't catch Amazon online, that doesn't mean it should be disregarded as an investment option. Wal-Mart has an average profit of $1.8 million per hour, and 90% of Americans live within 20 minutes of a Wal-Mart store. On average, more than 245 million customers visit Wal-Mart per week (physical plus online). Therefore, it's not as though you would be investing in a company without potential.

The bottom line

Wal-Mart catching Amazon online is an unlikely scenario, but Sam Walton began with one physical location in 1962, and no one would have predicted what Wal-Mart is today. The good news is that Wal-Mart should remain a quality long-term investment regardless of whether or not it sees success in this area. Wal-Mart is the largest retailer in the world, which leads to tremendous cash flow generation. This cash flow can then be used for innovation, global expansion, and capital returns to shareholders.