ServiceNow Stock at Support Zone – Bargain or Trap?
ServiceNow (NOW) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($123.14 – $136.10), levels from which it has bounced meaningfully before. In the last 10 years, ServiceNow stock received buying interest at this level 3 times and subsequently went on to generate 37.1% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 11/10/2023 | 12.9% | 32 |
| 1/4/2024 | 21.0% | 36 |
| 6/3/2024 | 77.3% | 239 |
Yet, a support zone alone isn’t enough; rebounds are more likely when fundamentals, sentiment, and market conditions line up. How does that look for NOW?
Rebound Likely Amid Strong Fundamentals & AI Traction
ServiceNow’s Q4 2025 results exceeded revenue and EPS estimates, with 21% subscription growth and increased current RPO. Fiscal year 2026 subscription revenue guidance projects 20-21% growth, surpassing analyst consensus. AI-driven Now Assist is gaining traction, significantly boosting new ACV. Analysts maintain a “Buy” consensus with substantial upside. An expanded $5 billion share repurchase program underscores capital allocation. The stock’s post-earnings dip reflects high valuation and a minor Q1 guidance miss, rather than fundamental deterioration, suggesting potential for recovery.
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How Do NOW Financials Look Right Now?
- Revenue Growth: 21.1% LTM and 22.3% last 3-year average.
- Cash Generation: Nearly 30.8% free cash flow margin and 13.9% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in the last 3 years for NOW was 21.1%.
- Valuation: NOW stock trades at a PE multiple of 77.7
| NOW | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Systems Software | – |
| PE Ratio | 77.7 | 24.1 |
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| LTM* Revenue Growth | 21.1% | 6.2% |
| 3Y Average Annual Revenue Growth | 22.3% | 5.6% |
| Min Annual Revenue Growth Last 3Y | 21.1% | 0.2% |
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| LTM* Operating Margin | 13.9% | 18.8% |
| 3Y Average Operating Margin | 11.2% | 18.4% |
| LTM* Free Cash Flow Margin | 30.8% | 13.5% |
*LTM: Last Twelve Months | For more details on NOW fundamentals, read Buy or Sell NOW Stock.
And What If The Support Breaks?
This stock isn’t immune to big drops. It fell about 27% during the 2018 correction and 30% in the Covid sell-off. The biggest hit came in the inflation shock, with a 51% decline from peak to bottom. Even with solid fundamentals, these dips show there’s real risk when market conditions turn. It might bounce back, but downside volatility is part of the game.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – 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.
Still not sure about NOW stock? Consider the portfolio approach.
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