ServiceNow (NYSE:NOW) Shares Cross Below 200-Day Moving Average Following Weak Earnings

Key Points

• ServiceNow shares fell below their 200-day moving average after the company reported adjusted EPS of $1.00, missing the $1.02 consensus, despite revenue rising 20.5% year over year to $4.11 billion.
• Investors were particularly concerned about slowing forward demand: fourth-quarter contracted backlog growth is expected to be about 18.5%, below the projected 21.5% revenue growth rate.
• ServiceNow continues to benefit from strong AI demand, including an expanded OpenAI partnership and a raised 2026 AI contract target of $1.7 billion, while analysts remain broadly positive with a “Moderate Buy” consensus and $154.50 average price target.

ServiceNow, Inc. (NYSE:NOW - Get Free Report)'s share price crossed below its 200-day moving average during trading on Thursday following a dissappointing earnings announcement. The stock has a 200-day moving average of $115.64 and traded as low as $108.68. ServiceNow shares last traded at $109.8290, with a volume of 76,137,360 shares traded.

The information technology services provider reported $1.00 earnings per share (EPS) for the quarter, missing the consensus estimate of $1.02 by ($0.02). ServiceNow had a net margin of 9.36% and a return on equity of 15.38%. The firm had revenue of $4.11 billion during the quarter, compared to analysts' expectations of $4.09 billion. During the same quarter in the prior year, the firm posted $4.82 EPS. ServiceNow's quarterly revenue was up 20.5% compared to the same quarter last year.

Key Stories Impacting ServiceNow

Here are the key news stories impacting ServiceNow this week:

• Positive Sentiment: ServiceNow reported third-quarter revenue of $4.11 billion, up 20.5% year over year, driven by subscription revenue of $3.99 billion and continued demand for AI products. Management also raised its 2026 AI contract target to $1.7 billion. NOW Q3 Earnings Lag Estimates, Revenues Rise on Subscription Growth
• Positive Sentiment: The company expanded its partnership with OpenAI to bring AI agents, governed workflows, cybersecurity capabilities and agentic development tools to enterprise customers. It also announced a five-year agreement for HPE’s Cloud & AI support services. ServiceNow and OpenAI accelerate enterprise AI
• Positive Sentiment: Several firms continue to see long-term upside. JPMorgan raised its target to $160, while Piper Sandler, Wells Fargo, Oppenheimer and others retained positive ratings despite reducing some targets. ServiceNow stock is on track for its largest drop on record
• Neutral Sentiment: The expanded AI opportunity may support future growth, but investors are weighing whether ServiceNow can convert large AI contracts into sustained revenue and earnings while maintaining cash-flow flexibility.
• Negative Sentiment: Adjusted EPS was $1.00, below the $1.02 consensus and down from the prior-year comparison cited in company coverage. Acquisition-related costs contributed to the miss. ServiceNow Lags Q3 Earnings Estimates
• Negative Sentiment: The main concern was forward demand: fourth-quarter guidance implies contracted backlog growth of about 18.5%, slower than expected and below the projected 21.5% revenue growth rate. Investors viewed the bookings outlook as an early warning for future sales.
• Negative Sentiment: Renewed fears that AI could pressure traditional software vendors were amplified by competition from startups such as Serval, which raised $150 million at a $3 billion valuation to challenge ServiceNow.
• Negative Sentiment: Analysts also flagged ServiceNow’s roughly $7.52 billion debt load and rising interest costs as risks to financial flexibility, adding to the earnings and valuation concerns. ServiceNow's Debt and Interest Costs Jump

Analyst Upgrades and Downgrades

Several equities research analysts recently weighed in on NOW shares. Sanford C. Bernstein reaffirmed an "outperform" rating and set a $266.00 target price on shares of ServiceNow in a research note on Tuesday, October 20th. Jefferies Financial Group set a $145.00 price target on shares of ServiceNow in a research report on Thursday. Truist Financial set a $150.00 price target on shares of ServiceNow and gave the stock a "buy" rating in a research note on Thursday. Zacks Research lowered ServiceNow from a "hold" rating to a "strong sell" rating in a research report on Monday, October 19th. Finally, Argus increased their price objective on ServiceNow from $134.00 to $170.00 and gave the company a "buy" rating in a research note on Wednesday, October 7th. One research analyst has rated the stock with a Strong Buy rating, thirty-six have assigned a Buy rating, three have assigned a Hold rating and three have issued a Sell rating to the company. Based on data from MarketBeat, the company currently has an average rating of "Moderate Buy" and an average target price of $154.50.

Insider Buying and Selling

In related news, insider Paul Fipps sold 2,034 shares of the stock in a transaction on Monday, August 31st. The stock was sold at an average price of $147.87, for a total value of $300,767.58. Following the transaction, the insider owned 18,305 shares of the company's stock, valued at $2,706,760.35. This represents a 10.00% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available through this hyperlink. Also, insider Jacqueline P. Canney sold 7,847 shares of the firm's stock in a transaction on Friday, August 28th. The shares were sold at an average price of $138.00, for a total value of $1,082,886.00. Following the completion of the sale, the insider owned 30,042 shares in the company, valued at approximately $4,145,796. This represents a 20.71% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 14,081 shares of company stock worth $1,937,904 over the last 90 days. 0.34% of the stock is owned by insiders.

Institutional Trading of ServiceNow

Institutional investors have recently bought and sold shares of the business. Cornerstone Financial Management LLC increased its position in ServiceNow by 72.8% in the 2nd quarter. Cornerstone Financial Management LLC now owns 254 shares of the information technology services provider's stock valued at $25,000 after acquiring an additional 107 shares in the last quarter. Marquette Asset Management LLC lifted its holdings in ServiceNow by 75.0% during the 2nd quarter. Marquette Asset Management LLC now owns 301 shares of the information technology services provider's stock worth $30,000 after buying an additional 129 shares in the last quarter. Kilter Group LLC bought a new position in ServiceNow in the 2nd quarter valued at $31,000. Solstein Capital LLC bought a new position in ServiceNow in the 2nd quarter valued at $35,000. Finally, Main Street Group LTD bought a new position in ServiceNow in the 1st quarter valued at $40,000. 87.18% of the stock is owned by hedge funds and other institutional investors.

ServiceNow Trading Down 26.8%

The company has a quick ratio of 0.70, a current ratio of 0.70 and a debt-to-equity ratio of 0.43. The company has a market cap of $113.56 billion, a P/E ratio of 79.01, a P/E/G ratio of 2.75 and a beta of 0.99. The business has a 50-day moving average price of $139.20 and a two-hundred day moving average price of $115.64.

About ServiceNow

ServiceNow, Inc provides cloud-based software designed to help organizations digitize, automate and manage enterprise workflows. Its Now Platform connects people, processes and systems across departments, enabling customers to manage work through a centralized technology environment.

The company's products and services address a range of business needs, including information technology service management, IT operations management, customer service management, human resources service delivery, security operations, risk and compliance, and application development.

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