Facebook's stock stumbles, but isn't likely to fall

It sure has seemed like Facebook's (FB) stock could only go up. The shares have been in a stunningly steady upswing for years, but they stumbled last week from an all-time high of $175, sliding to $165, before closing on Friday near $171. That slide, however, was its first major pullback in more than seven years.

The unexpected drop was due to the admission by Facebook CEO Mark Zuckerberg on Sept. 29 that the world's largest social media company had been manipulated into running politically themed ads, likely linked to Russian sources.

That has prompted some nervous investors to question whether to nix the stock from here. However, there's little indication that the major analysts on Wall Street are uneasy over the stock's staying power. 

"We believe that investors should be looking at this weakness as a buying opportunity," asserted Shebly Seyrafi, equity analyst at FBN Securities, who rates Facebook as "outperform," with a price target of $210 a share. 

Scott Kessler, senior equity analyst at CFRA Research, is also staying with his "buy" recommendation, with a 12-month price target of $210, based largely on Facebook's continuing dominance in social media with more than 1 billion monthly average users. He sees it continuing to build out its advertising technologies and offerings, and making impressive progress in increasingly making money from its mobile advertising and other products.

James Lee, managing director of U.S. research at Mizuho Securities, also rates Facebook a "buy," with a price target of $230 a share, based on the company's prospects of gaining entry into China by next year. 

Lee said based on his meetings with various industry contacts during a recent visit to China, he sensed favorable indications for Facebook in China, including the company's appointment of a government relations executive based in Beijing and its early success in generating more than $1 billion a year in revenues from Chinese advertisers that sell overseas.

"This approach appears to be aligned with Chinese government's policy to globalize local companies," Lee said, adding it help pave the way for Facebook to get approval to operate. If approved, "we believe FB will likely operate an Instagram-like app for photo and video-sharing, or VR gaming platform through Oculus," said Lee in a recent report to clients. 

FBN analyst Seyrafi believes three major reasons are behind the stock's recent weakness: Concern over Russian efforts to use social media to influence U.S. elections, which could lead to possible regulation of social media companies; investors moving out of big tech stocks, like Facebook, Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Google (GOOG) and into banks and the Russell 2000 small-cap index; and China possibly blocking WhatsApp in China.

The analyst noted that bank stocks became attractive after they became oversold around Sept. 7, which encouraged some investors to opt out of Facebook and the big techs stocks and buy the financials.    

On the issue of potential regulations on social media, Seyrafi noted that Zuckerberg is now committed to making political ads on the site more transparent, including the ability to visit an advertiser's page to see what ads it's running to any audience on Facebook. This will be rolled out over the coming months, Seyrafi said.

"We are not opposed to limited government regulation of political ads, and based on what is being proposed in Congress, the regulation would be more of a limited kind anyway," said Seyrafi. "So whether regulations eventually happen or there is just self-regulation, this issue appears to be way overblown," he argued.   

Kessler of CFRA sees Facebook's balance sheet as "flexible and enabling it to continue to commit capital to mobile technologies and offerings, geographic expansion and acquisitions of companies and patents." 

And given Fcebook's $39 billion in cash and short-term investments as of June 2017, "we see notable mergers and acquisitions as likely," said Kessler. He figures Facebook will earn $5.59 a share this year and $6.57 in 2018.   

With the stock already rebounding from last week's lows, if these analysts are right, time may be running out to get in on this buying opportunity.