ServiceNow arrives at its July 22 earnings release with short sellers continuing to exit positions even as the stock gives up further ground — a divergence that has sharpened since the previous note four days ago.
Short interest has declined another 7% over the past week to 28.2% of the free float, extending the retreat documented on July 15. That is a meaningful reversal from the mid-June peak near 64 million shares short. The borrow market supports the same read: cost to borrow has dropped 30% over the week to just 0.34%, and availability is extremely loose at more than 2,300% — over eleven shares available to lend for every one currently borrowed. The ORTEX short score has drifted lower to 38.9, its weakest reading in the past ten days, reinforcing the picture of a short base that is unwinding rather than building into the print.
Options positioning is calmer than the headline short interest figure might suggest. The put/call ratio came in at 0.74 on July 17, fractionally below its 20-day average of 0.75 and well within normal range — a z-score of -0.74. That places options sentiment closer to the bullish end of its recent band, far from the defensive spike seen ahead of prior challenging prints. The contrast with the stock's price action is notable: NOW fell another 0.7% on Friday to close at $103.24, lagging close peers (+10.2% on the week), (+8.1%), and (+7.2%). and both added roughly 4-5%. NOW's underperformance relative to the peer group is the week's clearest divergence.
The analyst debate heading into the print is more divided than the consensus Buy rating implies. Most sell-side firms remain constructive: Oppenheimer lifted its target to $140 from $130, TD Cowen reiterated Buy at $140, and Guggenheim upgraded to Buy at $125 on July 1. But Goldman Sachs trimmed its target to $145 from $163 on July 9, and UBS — sitting at Neutral — raised its target only to $115, still well below the consensus mean of $141. The bull case centers on platform expansion beyond IT service management, credible AI monetization, and a path to subscription revenue growth exceeding 17% by FY27. Bears point to the historic sequential drop in Contracted Remaining Performance Obligations, a 72% year-over-year collapse in federal government business, and a 35% decline in total open sales positions. With the stock trading at $103 against a $141 consensus target, the gap between where the stock is and where the Street thinks it should be is unusually wide — but only a clean beat on CRPO guidance is likely to close it.
The July 22 print will test whether the federal business deterioration was a one-quarter dislocation or the start of a structural slowdown — and whether the AI platform narrative can generate enough momentum in commercial bookings to offset it.
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ServiceNow enters its July 22 earnings window with the stock up sharply on the week and short sellers modestly retreating — a combination that sharpens the stakes for what was already a contested print. The clearest…
ServiceNow heads into its July 22 earnings window with an unusual alignment: the Street is turning more constructive just as short interest posts its first meaningful weekly decline in a month. The most notable…
