ServiceNow Stock To $996?

December 16th, 2025 by Trefis Team
NOW: ServiceNow logo
NOW
ServiceNow

ServiceNow (NOW) stock has fallen 12% during the past day, and is currently trading at $765.20. Our multi-factor assessment suggests that it may be time to buy more shares of NOW stock. We have, overall, a positive view of the stock, and a price of $996 may not be out of reach. We believe there is not much to fear in NOW stock given its overall Very Strong operating performance and financial condition. Hence, despite its Very High valuation, the stock appears Attractive but Volatile.

Below is our assessment:

  CONCLUSION
What you pay:
Valuation Very High
What you get:
Growth Very Strong
Profitability Strong
Financial Stability Very Strong
Downturn Resilience Moderate
Operating Performance Very Strong
 
Stock Opinion Attractive but Volatile

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Let’s get into details of each of the assessed factors but before that, for quick background: With $159 Bil in market cap, ServiceNow provides enterprise cloud solutions that automate workflows using AI, machine learning, RPA, analytics, and collaboration tools for improved service management and operational efficiency.

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[1] Valuation Looks Very High

  NOW S&P 500
Price-to-Sales Ratio 15.1 11.4
Price-to-Earnings Ratio 110.5 37.5
Price-to-Free Cash Flow Ratio 49.0 54.0

This table highlights how NOW is valued vs broader market. For more details see: NOW Valuation Ratios

[2] Growth Is Very Strong

  • ServiceNow has seen its top line grow at an average rate of 22.3% over the last 3 years
  • Its revenues have grown 21% from $10 Bil to $13 Bil in the last 12 months
  • Also, its quarterly revenues grew 21.8% to $3.4 Bil in the most recent quarter from $2.8 Bil a year ago.

  NOW S&P 500
3-Year Average 22.3% 12.2%
Latest Twelve Months* 21.1% 13.2%
Most Recent Quarter (YoY)* 21.8% 15.9%

This table highlights how NOW is growing vs broader market. For more details see: NOW Revenue Comparison

[3] Profitability Appears Strong

  • NOW last 12 month operating income was $1.8 Bil representing operating margin of 13.9%
  • With cash flow margin of 38.2%, it generated nearly $4.8 Bil in operating cash flow over this period
  • For the same period, NOW generated nearly $1.7 Bil in net income, suggesting net margin of about 13.7%

  NOW S&P 500
Current Operating Margin 13.9% 37.5%
Current OCF Margin 38.2% 35.5%
Current Net Income Margin 13.7% 27.6%

This table highlights how NOW profitability vs broader market. For more details see: NOW Operating Income Comparison

[4] Financial Stability Looks Very Strong

  • NOW Debt was $2.4 Bil at the end of the most recent quarter, while its current Market Cap is $159 Bil. This implies Debt-to-Equity Ratio of 1.3%
  • NOW Cash (including cash equivalents) makes up $5.4 Bil of $22 Bil in total Assets. This yields a Cash-to-Assets Ratio of 24.8%

  NOW S&P 500
Current Debt-to-Equity Ratio 1.3% 2.7%
Current Cash-to-Assets Ratio 24.8% 16.0%

[5] Downturn Resilience Is Moderate

NOW saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

  • NOW stock fell 51.3% from a high of $701.73 on 4 November 2021 to $341.76 on 14 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
  • However, the stock fully recovered to its pre-Crisis peak by 11 December 2023
  • Since then, the stock increased to a high of $1,170.39 on 28 January 2025 , and currently trades at $765.20

  NOW S&P 500
% Change from Pre-Recession Peak -51.3% -25.4%
Time to Full Recovery 423 days 464 days

 
2020 Covid Pandemic

  • NOW stock fell 30.2% from a high of $357.72 on 19 February 2020 to $249.57 on 3 April 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
  • However, the stock fully recovered to its pre-Crisis peak by 5 May 2020

  NOW S&P 500
% Change from Pre-Recession Peak -30.2% -33.9%
Time to Full Recovery 32 days 148 days

 

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read NOW Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.