Over the weekend, news broke that Germany’s antitrust watchdog is finally ready to implement restrictions on social media giant Facebook (NASDAQ:FB). FB stock didn’t even drop on the news, as of this writing on Monday afternoon,  Facebook stock is up more than 20 basis points, versus a 50-plus basis point drop for the Nasdaq Composite index.

News reports said that following a multi-year investigation into Facebook’s data privacy, Germany’s antitrust watchdog will “present [Facebook] with its ruling on what action it needs to take in the next few weeks”. That action presumably includes restrictions on what data Facebook can — and cannot — gather.

Still, negative news and not only is Facebook stock up, but it’s actually outperforming.

Why? Because while regulation is a big headline risk, it isn’t something that will kill FB stock. Over the next several months to years, legislation globally will change to implement controls regarding how much data Facebook can reasonably gather. That will affect the company’s targeting abilities, and ultimately dilute ad campaign effectiveness.

But, the changes will be relatively small, and they will impact everyone equally. Facebook won’t be put at a relative disadvantage to any rival. Relative ad effectiveness will remain the same, and therefore, prices and ad budget allocations should remain largely the same, too. As such, the financial implication of regulation isn’t all that worrisome for Facebook stock.

Regulation Risks Are Overstated

In totality, much like the other risks plaguing Facebook stock, the regulation risk is overstated. At its core, this is still a big growth company with a dominant position in a secular growth market, with a stock that is trading at its lowest valuation ever. That combination implies healthy gains ahead for the shares. I reiterate my claim that FB stock is a top idea for 2019.

Legislation globally is moving toward greater data privacy protection for individuals. Germany is among the first to implement such changes. They won’t be the last. Ultimately, this multi-national change will affect the way the digital advertising landscape looks in five to 10 years.

But, not by much.

In that time, Facebook, Alphabet (NASDAQ:GOOGL), Twitter (NYSE:TWTR), and other digital advertising giants will be relatively restricted in terms of the volume of data they can access and monetize. But, they will still have more data on the consumer than anyone in the world. This will remain true so long as consumers remain addicted to the internet and their platforms. Plus, each company will all be treated equally in terms of data protection, so no one platform will have a new advantage.

As such, digital advertising giants will continue to win the lion’s share of ad budgets because of their higher engagement and ad effectiveness relative to traditional advertising mediums. Also, within the digital advertising world, regulation won’t change ad budgets. Ad effectiveness across the board will be diluted. But, Facebook will still run better ads than Twitter, and Google will still run better ads than Snap (NYSE:SNAP). Thus, ad budget allocations will remain unchanged.

In the big picture, then, there isn’t that much of a financial implication from more regulation. Dollars will still flow in bulk into the digital channel because that’s where all the engagement is. And, within the digital channel, ad budgets won’t change because relative ad effectiveness won’t change.

Broadly speaking, regulation risks are simply overstated for Facebook stock.

Facebook Stock Is A Top Idea

From a fundamental vantage point, it appears that FB stock bottomed in 2018, and is ready for a rebound in 2019.

The problem with Facebook isn’t usage. Facebook’s properties are very sticky. Consumers love their phones, and when they are on their phones, they spend most of their time in just five apps. Depending on age and location, Facebook owns between two to four of those five apps. Some people are deleting those Facebook apps. Most aren’t. Facebook’s user base is still growing, and Instagram, Messenger, and WhatsApp have all been relatively immune to Facebook’s data privacy debacle.

As such, the problem here isn’t usage. The problem is a shift in consumption. Users aren’t leaving Facebook’s platforms. Instead, they are just shifting consumption from News Feeds to Stories. This shift has a negative financial implication. News Feed ads are tried and true. Facebook has been running them forever, can guarantee high ROI and engagement, and can command premium pricing.

That isn’t true with Stories ads. Facebook is relatively new to the Stories game. They can’t guarantee high ROI or engagement yet, and they can’t command premium pricing. As such, as engagement shifts to Stories, Facebook is monetizing engagement at a lower level than before.

This won’t last long. Facebook owns the biggest Stories platforms in the world, and it’s only a matter of time before Facebook figures out how to optimally monetize Stories. This will likely happen in 2019, as Facebook moves past data security issues and doubles down on Stories ad strategies.

As this does happen, Facebook’s revenue growth will re-accelerate higher, margins will rebound, and Facebook stock will soar.

Bottom Line on FB Stock

The risks which weighed on Facebook stock in 2018 are overstated. Meanwhile, upside in 2019 looks promising through enhanced Stories ad performance, which should drive re-accelerated revenue growth and margin expansion. If that does materialize, the market will easily brush aside 2018 as a fluke year, and push FB stock back toward the $200 level.

As of this writing, Luke Lango was long FB, GOOG, and TWTR.