ServiceNow delivered a complicated week: the stock bounced sharply after reporting, yet the earnings reaction itself was negative, leaving the short base elevated and the Street scrambling to reprice targets.
The actual earnings print on July 22 hit harder than the pre-earnings short retreat suggested. The stock fell almost 10% on the day — a reaction that stands as the sharpest single-day drop in the available history. That followed the pattern flagged in the pre-earnings note: shorts had been pulling back, borrow was cheap, and nothing in the lending market signalled bears were positioned for a miss. They weren't. The selloff came from disappointed longs, not a short attack. Since then, the stock has recovered nearly all of that ground, climbing 8.4% on the week to close at $110.62 — almost exactly back to where it traded before the print.
Short interest, despite the week's rally, remains structurally high. At 27.0% of the free float — around 56 million shares — the short base has fallen roughly 12% from its mid-June peak near 64 million shares, but the pace of that retreat has slowed. The week-on-week decline was just 3.7%, far smaller than the drawdowns seen through June and early July. Borrow conditions tell a similarly relaxed story from the bears' perspective: cost to borrow ticked up 46% on the week to 0.50%, but that remains negligible in absolute terms. Availability is extraordinarily loose at over 2,000% — there are more than twenty shares sitting available in the lending pool for every one currently borrowed. This is not a squeeze setup. The ORTEX short score has drifted down slightly to 38.5 from a high of roughly 40.5 in early July, consistent with a short base that is trimming, not pressing. Options positioning is broadly neutral; the put/call ratio of 0.79 sits just a fifth of a standard deviation above its 20-day average of 0.78, well within normal range and far from the defensive extremes seen earlier this year.
The Street response to the earnings print was a collective target-raise accompanied by no rating changes. Virtually every firm that covered the print on July 23 lifted its target while keeping its existing rating intact. JP Morgan raised to $150 from $145 maintaining Overweight. Evercore ISI moved to $160 from $150. Bernstein went to $248 from $236, though that target sits dramatically above the current price and should be treated as an outlier. The mean of the more tightly clustered targets from BMO ($118), Baird ($125), Needham ($115), and RBC ($130) implies modest upside from current levels. The one sour note: Macquarie's analyst raised only to $110 — essentially the current price — while maintaining a Neutral rating, signalling that the cautious camp sees the recovery as fully pricing in the good news. Bull case centres on AI platform expansion and an organic subscription revenue path above 17% growth by FY27. Bears point to the CRPO shortfall — the largest sequential miss in the company's history — and a 72% year-over-year collapse in federal obligations that has yet to fully reverse. On valuation, the trailing PE has expanded to roughly 24x on the back of the price recovery, up from about 22x a month ago, while EV/EBITDA is running near 15.5x.
The institutional picture shows no drama. BlackRock holds 9.4% and added roughly 2.2 million shares through June. T. Rowe Price and Amundi both added meaningfully through Q2. The top-15 holders are a stable mix of passive and active managers, with no obvious activist presence.
The performance context is also worth noting. WDAY led the peer group this week with a 13.1% gain, outpacing NOW's 8.4% move. HUBS and GWRE both added roughly 9-12%. The whole enterprise software complex rallied. NOW's relative underperformance within the peer group is modest but real — suggesting the market is still digesting the CRPO data even as it welcomes the headline recovery.
The next earnings date is October 28. Between now and then, the key question is whether the CRPO trajectory stabilises and whether federal headwinds show any reversal — two data points that will determine whether the current 27% short float remains a structural feature or begins to unwind more aggressively.
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