ServiceNow (NYSE:NOW) Shares Down 6% - Should You Sell?

Key Points

• ServiceNow shares fell 6% to $102.24 in Thursday trading, with volume 14% above average.
• AI demand and commercial partnerships offer potential upside: ServiceNow raised its AI contract-value target to $1.7 billion and expanded partnerships with LTM and the NBA. Risks cited include slower backlog growth, rising costs, and concerns that AI competitors could disrupt established software providers.
• Quarterly revenue rose 20.5% year over year to $4.11 billion, beating estimates, while EPS of $1.00 narrowly missed the $1.02 consensus. Analysts’ average rating is “Moderate Buy,” with a consensus price target of $154.50.

ServiceNow, Inc. (NYSE:NOW - Get Free Report)'s share price fell 6% during trading on Thursday. The company traded as low as $101.80 and last traded at $102.2420. Approximately 24,677,442 shares traded hands during mid-day trading, an increase of 14% from the average session volume of 21,635,402 shares. The stock had previously closed at $108.81.

Key Stories Impacting ServiceNow

Here are the key news stories impacting ServiceNow this week:

• Positive Sentiment: ServiceNow and LTM plan to expand their partnership, combining ServiceNow’s AI Platform with LTM’s expertise to scale agentic AI projects and pursue joint sales opportunities. The companies say they have 700 shared clients, providing a potential base for adoption. LTM and ServiceNow expand partnership
• Positive Sentiment: ServiceNow raised its AI contract-value target to $1.7 billion as adoption accelerates, signaling demand for its AI offerings. The NBA also extended its partnership and will use EmployeeWorks for employee self-service and workplace requests. Q3 earnings call highlights NBA partnership extension
• Positive Sentiment: Argus issued ServiceNow a Buy rating, adding a favorable analyst view amid the recent weakness. Argus Buy rating
• Neutral Sentiment: Commentary comparing ServiceNow with Salesforce and Arista highlights its enterprise AI opportunity, but these articles offer opinions rather than new company financial results or commitments. Arista Networks vs. ServiceNow Salesforce vs. ServiceNow
• Negative Sentiment: The earnings-call recap flags slower backlog growth and revenue adjustments as outlook risks. Separately, commentary argues that costs are rising faster than AI adoption, raising questions about how quickly AI demand will translate into profitable growth. Q3 earnings call highlights AI adoption and rising costs
• Negative Sentiment: Investors have also been selling software stocks amid fears that AI labs could build applications that challenge established vendors such as ServiceNow. That broader concern may be weighing on the shares despite bullish views that the company could benefit from AI. AI disruption concerns

Analyst Ratings Changes

A number of analysts have recently weighed in on NOW shares. Royal Bank Of Canada set a $165.00 price objective on ServiceNow and gave the company an "outperform" rating in a research note on Thursday, October 29th. Mizuho set a $165.00 target price on shares of ServiceNow in a research note on Thursday, October 29th. Stifel Nicolaus set a $160.00 price target on shares of ServiceNow and gave the company a "buy" rating in a report on Tuesday, October 6th. BTIG Research dropped their price target on shares of ServiceNow from $170.00 to $150.00 and set a "buy" rating for the company in a research report on Thursday, October 29th. Finally, Barclays set a $152.00 price target on shares of ServiceNow and gave the stock an "overweight" rating in a report on Thursday, October 29th. One investment analyst has rated the stock with a Strong Buy rating, thirty-six have assigned a Buy rating, three have issued a Hold rating and three have issued a Sell rating to the stock. According to data from MarketBeat.com, the stock presently has an average rating of "Moderate Buy" and a consensus price target of $154.50.

ServiceNow Trading Down 6.0%

The company has a quick ratio of 0.72, a current ratio of 0.72 and a debt-to-equity ratio of 0.42. The firm's fifty day moving average is $137.51 and its two-hundred day moving average is $115.05. The firm has a market cap of $106.13 billion, a P/E ratio of 73.56, a PEG ratio of 2.09 and a beta of 1.00.

ServiceNow (NYSE:NOW - Get Free Report) last issued its quarterly earnings data on Wednesday, October 28th. The information technology services provider reported $1.00 EPS for the quarter, missing the consensus estimate of $1.02 by ($0.02). ServiceNow had a return on equity of 15.17% and a net margin of 9.36%. The company had revenue of $4.11 billion during the quarter, compared to the consensus estimate of $4.09 billion. During the same quarter last year, the company posted $4.82 earnings per share. The firm's revenue for the quarter was up 20.5% compared to the same quarter last year. Analysts predict that ServiceNow, Inc. will post 2.13 earnings per share for the current fiscal year.

Insider Activity at ServiceNow

In other ServiceNow news, Director Paul Chamberlain sold 2,700 shares of ServiceNow stock in a transaction that occurred on Thursday, August 27th. The stock was sold at an average price of $135.50, for a total transaction of $365,850.00. Following the sale, the director directly owned 43,990 shares of the company's stock, valued at approximately $5,960,645. The trade was a 5.78% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this link. Also, insider Jacqueline P. Canney sold 7,847 shares of the company's stock in a transaction that occurred on Friday, August 28th. The stock was sold at an average price of $138.00, for a total value of $1,082,886.00. Following the transaction, the insider owned 30,042 shares in the company, valued at $4,145,796. This trade represents a 20.71% decrease in their position. 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 have sold 14,081 shares of company stock worth $1,937,904 over the last 90 days. 0.34% of the stock is owned by company insiders.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently made changes to their positions in the company. Bank of Nova Scotia lifted its holdings in ServiceNow by 53.3% in the 1st quarter. Bank of Nova Scotia now owns 1,018,036 shares of the information technology services provider's stock worth $106,436,000 after purchasing an additional 353,749 shares in the last quarter. Sapient Capital LLC boosted its stake in ServiceNow by 266.0% in the 2nd quarter. Sapient Capital LLC now owns 77,661 shares of the information technology services provider's stock worth $7,710,000 after purchasing an additional 56,444 shares during the period. Meeder Advisory Services Inc. purchased a new stake in ServiceNow during the 2nd quarter valued at approximately $2,881,000. Vestor Capital LLC grew its holdings in ServiceNow by 38,987.2% during the 1st quarter. Vestor Capital LLC now owns 122,343 shares of the information technology services provider's stock valued at $12,791,000 after buying an additional 122,030 shares in the last quarter. Finally, Cardano Risk Management B.V. grew its holdings in ServiceNow by 6.9% during the 2nd quarter. Cardano Risk Management B.V. now owns 484,785 shares of the information technology services provider's stock valued at $48,129,000 after buying an additional 31,119 shares in the last quarter. Hedge funds and other institutional investors own 87.18% of the company's stock.

ServiceNow Company Profile

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.