ServiceNow stock flashes a death cross amid rising SaaSpocalypse concerns
ServiceNow stock price has tumbled in the past few months, erasing billions of dollars in value as the market capitalization has dropped from $233 billion to $98 billion. NOW has tumbled amid the rising concerns that artificial intelligence tools will disrupt its business model. So, is it safe to buy the dip or sell the rip?
Why ServiceNow stock has plunged this year
ServiceNow and most software companies like Adobe, Intuit, and Atlassian have all plunged in the past few months amid concerns that the SaaSpocalypse is happening. Investors are simply concerned that companies will abandon these services and embrace AI tools made by companies like Anthropic and OpenAI.
The stock has also plunged amid fears that its revenue growth will slow in the future as this transition continues. At the same time, the company is simply going through a valuation reset, as its price-to-earnings ratio was at an elevated level a few years ago.
Most importantly, the company has executed several acquisitions in the past few months. It spent $7.75 billion acquiring Armis, a company integrating artificial intelligence tools. It also acquired Moveworks in a $2.85 billion deal. In most cases, investors tend to question whenever a company is focusing on growth through acquisitions.
Wall Street analysts have continued to slash their estimates for the stock. The average estimate among analysts is $144. While this is much higher than the current $95, it is significantly lower than $212 12 months ago.
ServiceNow’s growth is continuing
The most recent results showed that ServiceNow’s business is doing well this year, with its revenue continuing. Data showed that its total revenue jumped by 22% in Q1 to over $3.77 billion.
Similarly, its remaining performance obligations (RPO) rose by 25% to over $27.7 billion. Analysts now expect its business will continue to grow in the near term, with the average revenue coming in at $3.93 billion, up by 22% YoY. In most cases, the company tends to do better than estimates.
The company’s earnings-per-share (EPS) is also expected to continue growing, moving from 82 cents to 86 cents. Bernstein’s Peter Weed has a target of $236, while Barclays hiked from $132.
ServiceNow stock price technical analysis
NOW stock chart | Source: TradingView
The weekly chart shows that the NOW stock has crashed in the past few months, moving from a high of $240 in January 2025 to the current $95.07. It formed a death cross as the 50-week and 200-week moving averages crossed each other. This cross happened on April 24.
The stock has moved below the 78.6% Fibonacci Retracement level. It has formed a bearish flag pattern, a common continuation sign in technical analysis. This pattern is made up of a vertical line and a horizontal channel.
Therefore, the stock will likely remain under pressure in the near future, with the next key target to watch being at $81.36, its lowest point this year. In the future, however, the stock will likely bounce back, potentially to the key resistance at $110.
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