I’d been a bull for quite some time when it came to Facebook (NASDAQ:FB). But amid a rough year, I’ve stepped to the sidelines on Facebook stock. And with the FB stock price clearly headed in the wrong direction and threatening a new 18-month low, the reasons for caution are obvious.

But fundamentally, the FB stock price seems something close to ridiculous. It’s true that growth is decelerating and will do so further. Facebook has monthly active users of 2.3 billion; it’s simply running out of room for user growth. And higher spend on security and safety is impacting margins.

Still, it’s coming off a quarter where revenue rose 33% and operating income 13% — and Facebook stock trades at 17x 2018 EPS when backing out its net cash. That’s a multiple that — particularly in this market — suggests profit growth is simply going to come to a halt, and quickly.

That valuation does seem too cheap given Facebook’s prospects. But it will take some time and some savvy decision making for Facebook to prove that to investors. With the FB stock price showing such weakness, I’m not in any rush to jump in. But over time, I do believe that FB stock will bounce back.

What Does the FB Stock Price Mean?

The multiple applied to Facebook stock seems close to ridiculous. Based on 2018 numbers, and backing out some $41 billion in cash and securities, the FB stock price is about 17x earnings and 13x EBITDA (earnings before interest, taxes, depreciation and amortization). Both multiples could be pushed even lower by backing out figures (like stock-based compensation) excluded from most non-GAAP calculations used by other companies.

Those multiples aren’t just a discount to, say, advertising rival Alphabet Inc (NASDAQ:GOOGL,GOOG). Facebook stock is cheaper than Coca-Cola (NYSE:KO), whose growth has stalled out. On an EV/EBITDA basis, it’s cheaper than Kraft Heinz (NASDAQ:KHC), a lumbering, highly-indebted CPG trying (and so far failing) to adapt to a quickly changing industry. On its face, by any reasonable (or even unreasonable) comparison, FB seems like potentially the cheapest stock in the entire market.

FB’s Low Multiple

There are two broad reasons why Facebook stock should be trading at such a low multiple. The first is that growth going forward is going to slow down. Facebook already has announced increased spending –one key reason the FB stock price set the record for the biggest single-day decline in market value back in August. Also user growth is slowing, and ARPU (average revenue per user) increases are moderating.

But growth isn’t slowing — or expected to slow — that much. If Facebook’s operating income growth dropped to 5% in perpetuity, it still would be undervalued. And with ARPU increases still ahead, as the company improves its advertising sales, and room for the company to improve margins as AI takes over more of the heavy lifting in moderation, even flat usage easily leads to consistent EBIT growth for years to come.

So, to some extent, the market is also pricing in some risk of a scenario in which Facebook starts to decline. And that scenario is not impossible to imagine. The second reason FB stock should be trading at a low multiple is that the same “network effects” that brought everyone to the platform matter when users start to exit as well. Facebook is fun because all (or almost all) of your friends and family are there. It loses value with each departure. With so many negative headlines of late over Cambridge Analytica and elections and political bias, it’s not hard to imagine users leaving — at some point.

Why Facebook Can Muddle Through — At Worst

The steady decline in the FB stock price of late has been driven by both factors. Spending is going to rise, pressuring margins. And the platform’s perception has become markedly worse over the year – even among its own employees.

But both risks are manageable. Facebook’s namesake platform is going to keep printing money, even with a few billion dollars in extra spend. For all the negativity this year, Facebook’s own numbers show that users aren’t departing yet. And if they do, many are simply going to Instagram and WhatsApp — both of whom Facebook happily owns. So it’s not as if Snap (NYSE:SNAP) or even Twitter (NYSE:TWTR) are stealing market share.

Facebook’s growth is going to slow. But at these prices, that’s all right. FB stock here is somewhat reminiscent of what was then Google stock in 2011-2012. No one questioned Google’s dominance in search; the concern was that the shift to mobile would pressure margins. (Similar concerns led the FB stock price to fall by 50% after its IPO.)

Backed by a fortress balance sheet, however, Google managed to pivot rather adroitly, managing the shift to mobile and building out new businesses like Waymo. Why, exactly, can’t Facebook do something similar? If customer demands change, FB can further alter the platform or try and push those customers to its additional platforms. It can move more strongly into content. It can improve ad pricing and margins.

Obviously, Facebook’s strategy through this shift is paramount. The company has to make the right decisions (or at least mostly right). But it doesn’t have to be perfect or close. It just has to keep the current business reasonably intact and get better at what it does (as most companies do) to keep earnings moving higher. The FB stock price will follow.

And if it turns out that the current worries about the state of Facebook are overdone, or if the company finds a home run opportunity elsewhere, FB could again be considered a tech giant — and be valued like one.

No Rush

Right now, however, investors simply don’t trust the strategy here. CEO Mark Zuckerberg is taking criticism not seen since his hoodie was an issue.

It’s going to take some time for Facebook to adjust to lower growth — and for investors to do the same. But even on the current path, Facebook is going to have more cash than it will know what to do with. It will be able to pay a dividend if it likes, or buy back stock. It can make acquisitions. The potential of Instagram and WhatsApp — particularly from a monetization standpoint — remains largely untapped.

There’s simply a lot of room for error here — essentially anything but a near-term decline in the namesake platform. There are a lot of options as well. Right now, investors are worried because they don’t know what Facebook is going to do. But at some point, that flexibility will be seen as a positive, not a negative. And it’s then that I expect the FB stock price to start rising again for good.

As of this writing, Vince Martin has no positions in any securities mentioned.