ServiceNow Stock Just Took All of My Money...

AI-generated source summary

ServiceNow (NOW) experienced a significant 25% drop after its Q3 2026 earnings report, despite beating revenue expectations with $4.11B (vs. $4.09B expected) and showing strong subscription revenue growth of 21% YoY. However, Adjusted EPS missed estimates at $0.37 (vs. $1.02 expected), with GAAP EPS at $0.27. Contracted revenue (cRPO) showed growth of 20.5% YoY, reaching $13.65B, and total RPO was $29.7B, up 22% YoY. The AI segment shows promise, with the ACV target raised to $1.7B+, indicating significant adoption and growth potential. Guidance was also raised for FY26 subscription revenue to $15.785B and free cash flow margin to 36%. The stock's sharp decline is attributed to the slowing cRPO growth rate, dropping to 18.5% from 21% in previous quarters, which is seen as a key indicator for future revenue. This slowdown, combined with early renewals pulled into Q3 and a higher on-prem mix from the public sector, created headwinds. The market's reaction suggests a lack of confidence in AI's ability to offset rising costs and drive future profitability, especially given the high valuation (P/E of ~40x adjusted). The chart shows a breakdown below the 50-day and 200-day moving averages, indicating a bearish short-term outlook. Support is expected around $100, which coincides with previous lows and the lower bound of a channel. A break below this level could lead to further downside.

AI-generated summary based on the source content.