ServiceNow enters the final stretch before its July 22 earnings with a contradictory setup: shorts are rebuilding after a brief retreat, the stock has lost ground on the week, and the Street's price targets sit well above where the market is willing to price the name.
The short interest story has taken a small but notable turn since the previous note flagged an early retreat. Shares short peaked near 68.4 million in early June, pulled back to roughly 62 million by mid-month, and have since stabilised around 63 million — 30.4% of free float. That is up 1.4% on the week and up 25.8% over the past month. The short score has drifted in a tight band between 39.8 and 40.7 over the past ten sessions, suggesting bears have neither capitulated nor pressed harder. What has changed is the direction: after the covering impulse stalled, short interest has crept back toward its recent peak rather than away from it.
The lending market offers bears no reason to stop. Availability has eased slightly from the 52-week trough of 1,340% hit on June 3 and now reads close to 1,928% — roughly nineteen shares available for every one currently borrowed. Cost to borrow is running at just 0.41% annualised, up 6% on the week but still negligible as a friction cost. Options positioning is also calm: the put/call ratio at 0.74 is marginally below its 20-day average of 0.76, implying no particular rush for downside protection despite the week's 5.3% price decline to $95.94. The overall picture from the positioning data is a patient, low-cost short rather than a crowded or panicked one.
The Street's bull and bear cases pull in sharply different directions, which may partly explain why shorts remain comfortable sitting in the name. The most recent analyst action came from Benchmark, which lifted its target to $130 on June 15. BofA Securities reinstated coverage in May with a Buy and a $130 target. Barclays and Evercore both raised targets modestly after the last earnings print. Yet even those constructive revisions leave targets clustered in the $120–$160 range, well below the analyst consensus mean near $142 — and the stock is trading at $95.94, implying roughly 48% upside to that mean. The gap between price and consensus is wide enough to reflect genuine disagreement rather than simple lag. The bear case centres on the historic drop in Contracted Remaining Performance Obligations and a 72% year-over-year decline in Federal Government business — two data points that suggest the company's strongest growth engine may be running cooler than the headline NNACV numbers imply. The valuation multiples have compressed: the price-to-book has pulled back by nearly 0.6x over the past 30 days, and the PE has come in almost two points over the same period. Factor scores offer little conviction either way, with EPS surprise ranking in the 34th percentile and EPS forward momentum in the 44th.
The earnings history adds texture to the July setup. The last two prints were painful: the April 23 result produced a 12.5% single-day drop and a 14.3% five-day decline, while an earlier April print fell 15.3% on the day. The most recent May 21 result was broadly flat to marginally positive, suggesting the stock found a floor after those earlier shocks. Peers have tracked broadly lower on the week alongside NOW — CRM fell 6.8%, WDAY dropped 11.2%, and TEAM lost 11.1% — though RBRK bucked the group with a 6.4% gain, illustrating how selectively the market is rewarding software names at present.
With earnings on July 22 and short interest still elevated at 30% of float, the key variable to watch is whether Federal business trends in the upcoming print show any stabilisation — or whether the sequential CRPO decline that spooked the market in prior quarters persists.
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