ServiceNow, Inc.

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ServiceNow, Inc. stock analysis NOW overview
Somewhat Bullish +45

ServiceNow Has Fallen Over 50% From Its High. At $102, Is the Selloff Finally Overdone? - TIKR.com

📉 ServiceNow shares closed at $102.15 on June 12, 2026, representing a drop of over 50% from the 52-week high of $211.48.

💰 Q1 2026 revenue reached $3.77 billion (up 22% YoY) with adjusted EPS of $0.97, yet the stock fell 17.75% on earnings.

🛒 The $7.75 billion Armis acquisition is expected to reduce full-year operating margins by approximately 75 basis points in 2026.

🌍 Delayed deals in the Middle East are contributing a roughly 75-basis-point headwind to subscription growth.

📊 The company trades at an NTM EV/EBITDA of 15.9x, down from over 42x a year ago, reflecting a significant multiple compression.

💻 EVP Gaurav Rewari stated the Data and Analytics unit is on track to break $1 billion plus in ARR within a few quarters.

🛡️ Management emphasizes a single platform architecture with unified data models as the core defensive moat against AI commoditization.

📈 Analyst consensus includes 34 Buys, 9 Outperforms, and 4 Holds, with a mean price target of $142 implying ~39% upside.

🔮 TIKR's mid-case valuation model projects a stock price of around $257 by the end of 2030 with an IRR of about 22% per year.

📅 The critical catalyst for the thesis is Q2 earnings on July 29, where subscription revenue growth near the 21% guidance is key.

💸 ServiceNow generated $5.1 billion in levered free cash flow over the trailing twelve months and authorized a $5 billion buyback.

📉 The company repurchased roughly 20 million shares in Q1, signaling management's view that the stock is undervalued.

Bullish Signals
  • ServiceNow reported strong Q1 2026 results with revenue of $3.77 billion, up 22% year over year, demonstrating resilient top-line growth.
  • The company generated $5.1 billion in levered free cash flow over the trailing twelve months, providing a strong financial anchor.
  • Management authorized an additional $5 billion share buyback in January and repurchased roughly 20 million shares in Q1, signaling confidence at current prices.
  • EVP Gaurav Rewari projects the Data and Analytics unit will break $1 billion plus in ARR within a few quarters, opening a new growth vector.
  • Analysts maintain a constructive stance with 34 Buys and 9 Outperforms, setting a mean price target of $142 for roughly 39% upside from current levels.
  • The company maintains a single platform architecture that unifies workflows and analytics, offering a defensible moat against AI disruption.
  • TIKR's mid-case model projects a total return of around 152% by the end of 2030 based on conservative assumptions rather than heroic growth.
Risk Factors
  • The $7.75 billion Armis acquisition is expected to pressure full-year operating margin by about 75 basis points and free cash flow margin by about 200 basis points in 2026.
  • Delayed deals in the Middle East added a roughly 75-basis-point headwind to subscription growth, complicating near-term expansion metrics.
  • The broader market is doubting whether AI spending concentrated in hyperscalers is actually reaching enterprise software vendors like ServiceNow.
  • ServiceNow trades at an NTM EV/EBITDA of 15.9x, significantly lower than the over 42x multiple seen a year ago, indicating severe multiple compression.
  • If AI shifts enterprise budgets toward data platforms and away from workflow software, revenue growth could slow faster than models assume.
  • Management flagged a roughly 125-basis-point Q2 headwind from Armis, and anything worse would deepen fears that pushed the stock down.
Full Analysis
ServiceNow (NOW) shares have dropped over 50% from their 52-week high of $211.48 to close at $102.15 on June 12, 2026, marking a max drawdown of 60.28%. Despite reporting strong Q1 2026 results with revenue up 22% year-over-year to $3.77 billion and adjusted EPS of $0.97, the stock fell 17.75% on earnings day as investors focused on forward guidance rather than the beat. The market is currently pricing in fears that the company's growth story is breaking, even though it remains a high-quality compounder generating billions in cash. The selloff was driven by three primary concerns: the $7.75 billion acquisition of Armis, which is expected to pressure full-year operating margins by 75 basis points and free cash flow margins by 200 basis points in 2026; delays in Middle East deals adding a 75-basis-point headwind to subscription growth; and broader market skepticism regarding whether AI spending from hyperscalers is actually reaching enterprise software vendors. Consequently, ServiceNow has traded at an NTM EV/EBITDA of 15.9x, down significantly from over 42x a year ago, creating a valuation disconnect between the business fundamentals and the stock price. Management argues that ServiceNow is building a multibillion-dollar data business on top of its existing customers, with EVP Gaurav Rewari projecting the Data and Analytics unit to break $1 billion in ARR within a few quarters. The company maintains its moat through a single platform architecture that unifies workflows and analytics, allowing it to sell outcomes rather than just databases. Analysts remain constructive with 34 Buys and 9 Outperforms against a mean target of $142, while TIKR's mid-case model projects a target of $257 by the end of 2030, implying a total return of around 152%.