Down 24%, Is ServiceNow Stock a Buy Now?
ServiceNow (NOW) stock has fallen by 23.5% in less than a month, from $136.34 on 26th Jan, 2026 to $104.27 now. Should you buy this dip?
Dip buying is a viable strategy for quality stocks that have a history of recovering from dips. As it turns out, NOW stock passes basic quality checks. Historically, the median return for the 12-month period following sharp dips was 31% , with median peak return reaching 570%. We define sharp dip as stock going down 30% or more, in less than 30 day period.
Below, we get into details of historical dips and subsequent returns.
Historical Median Returns Post Dips
| Period | Past Median Return |
|---|---|
| 1M | 3.3% |
| 3M | 24.2% |
| 6M | 22.9% |
| 12M | 30.6% |
Historical Dip-Wise Details
NOW had 4 events since 1/1/2010 where the dip threshold of -30% within 30 days was triggered
- 570% median peak return within 1 year of dip event
- 236 days is the median time to peak return after a dip event
- -9.8% median max drawdown within 1 year of dip event
| 30 Day Dip | NOW Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | NOW | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | 31% | 570% | -10% | 236 | ||||
| 2052026 | -34% | -1% | 5% | 5% | -2% | 13 | ||
| 3102025 | -30% | -8% | -32% | 453% | -36% | 115 | ||
| 2022016 | -34% | -7% | 57% | 687% | -18% | 364 | ||
| 4252014 | -30% | 1% | 58% | 752% | -2% | 356 | ||
ServiceNow Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 20.9% | Pass |
| Revenue Growth (3-Yr Avg) | 22.4% | Pass |
| Operating Cash Flow Margin (LTM) | 41.0% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | 99.3 | |
| => Cash To Interest Expense Ratio | 273.2 |
Not sure if you can take a call on NOW stock? Consider portfolio approach
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