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ServiceNow Stock Just Plunged More Than 20% in a Single Day. Here's What It Did After Its Other Biggest Drops.
The Motley Fool • • business
Key Points:
- ServiceNow shares plunged nearly 25% to around $112 following its third-quarter earnings report, marking the stock's worst single-day drop since its 2012 IPO, despite subscription revenue growing 21% year over year.
- The sharp decline was driven by a cautious fourth-quarter outlook, with management forecasting 18.5% growth in current remaining performance obligations (cRPO), signaling a slowdown compared to previous quarters.
- Historically, most of ServiceNow's large single-day stock drops have been followed by significant gains within six to twelve months, although notable exceptions in 2025 resulted in prolonged declines.
- Management attributes part of the cRPO slowdown to timing effects, including early contract renewals shifting revenue recognition between quarters, but acknowledges the trend of slowing cRPO growth throughout 2026.
- The stock's valuation has become more attractive at about 23 times expected 2027 earnings, down from 30 times before the sell-off, though future performance will depend on whether fourth-quarter cRPO growth meets or exceeds guidance.
