Why ServiceNow Stock Crashed -40%?
Over nearly three months from late October to January, ServiceNow (NOW)’s stock tumbled 37%, despite modest revenue growth. Fears around AI disruption, a cautious outlook for FY26, and an aggressive acquisition spree shook investor confidence, overshadowing earnings and buyback moves. What really unsettled the market?
Below is an analytical breakdown of stock movement into key contributing metrics.
| 10312025 | 1292026 | Change | |
|---|---|---|---|
| Stock Price ($) | 183.9 | 116.7 | -36.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 12,667.0 | 13,278.0 | 4.8% |
| Net Income Margin (%) | 13.7% | 13.2% | -3.7% |
| P/E Multiple | 110.3 | 69.4 | -37.1% |
| Shares Outstanding (Mil) | 1,038.2 | 1,039.1 | -0.1% |
| Cumulative Contribution | -36.5% |
So what is happening here? The stock dipped 37%, driven by a modest 4.8% revenue rise, a 3.7% margin decline, and a sharp 37% drop in valuation. Let’s dig into what’s behind these shifts.
Here Is Why ServiceNow Stock Moved
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- Q4 2025 Earnings: Beat revenue & non-GAAP EPS, but diluted EPS missed. Stock fell 11% on Jan 29, 2026.
- Weak FY26 Guidance: Full-year 2026 revenue guidance was lower than analyst expectations.
- Acquisition Spree: Concerns over expensive acquisitions (Moveworks, Armis) and their impact.
- AI Disruption Fears: Investor fear competitors will replicate software using AI tools, impacting SaaS sector.
- Stock Split & Repurchase: 5-for-1 split (Dec 17, 2025) & $5B buyback failed to buoy stock amidst negatives.
Our Current Assesment Of NOW Stock
Opinion: We currently find NOW stock attractive but volatile. Why so? Have a look at the full story. Read Buy or Sell NOW Stock to see what drives our current opinion.
Risk: To get a real sense of risk, check how much this stock fell in past market shakes. During the 2018 correction, it dropped about 27%. The Covid pandemic hit it harder, with a 30% dip from peak to bottom. Inflation shock in 2022 was even tougher, slicing off over 51%. So even with strong fundamentals, big market sell-offs can push the stock well into the red. It shows just how vulnerable it is when investors hit the panic button.
Think this decline in NOW stock is a buying opportunity? Maybe it is, but single-stock investments can be quite risky. 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.