NOW is trading at a genuine inflection point this week — short sellers have abandoned positions at the fastest weekly rate in recent memory while the stock climbs 8% and the Street updates its targets higher.
The standout story is the speed of the short squeeze-out. Short interest collapsed 40% over the week to 15.8% of float — down from roughly 27% a month ago and nearly halved over 30 days. In raw share terms, more than 19 million borrowed positions were unwound in a single session on August 11, the sharpest single-day reduction in the 30-day window. That kind of exit isn't measured repositioning; it looks like forced covering. The borrow market confirms the direction of travel: availability has surged to 4,307% — meaning lenders now hold more than 43 shares available for every one already borrowed — the loosest conditions recorded over the past 52 weeks, against a prior-year minimum of 1,340%. Cost to borrow is running at just 0.37%, down 18% on the week and near its floor. Everything in the lending market signals that the short-selling thesis is being actively abandoned, not just trimmed.
Options positioning tells a steadier story. The put/call ratio is 0.84, almost exactly in line with its 20-day average and well below the 52-week defensive peak of 1.17. With a z-score near zero, options traders are neither loading up on hedges nor chasing calls aggressively. The ORTEX short score has also moved sharply lower — 32.2 now, down from 38.2 a week ago — reflecting the combined effect of falling short interest and easing borrow pressure. Positioning looks de-risked rather than newly bullish.
The Street reaction to Q2 earnings (reported July 22) was broadly constructive, even if the initial session was choppy. Multiple firms lifted targets the day after the print — Bernstein moved to $248, Evercore to $160, JP Morgan's Samik Chatterjee nudged to $150 — maintaining positive ratings across the board. The most recent action came this morning, with Wells Fargo's Michael Turrin raising his target to $175 from $160 while holding Overweight, the freshest bullish signal from a bellwether firm. Macquarie stands as the lone cautious voice, keeping a Neutral rating with a $110 target — well below the stock's current $127.54 print, suggesting its model reflects bear-case concerns more than consensus. The valuation multiple landscape reflects the re-rating in progress: the P/E has expanded roughly 3.3 points over 30 days, and the price-to-book is up more than half a point on the week. The EV/EBITDA multiple at 18.2x is actually down slightly over 30 days, giving bulls a relative-value handle.
The bull and bear debate centres on two diverging data sets. Bulls point to FY25 NNACV growth of 9% year-over-year, expansion beyond ITSM into customer service and HR, and an AI workload ramp that analysts believe can push organic subscription revenue growth above 17% by FY27. Bears focus on the largest sequential CRPO shortfall in company history — $207 million below seasonal expectations — and a 72% year-over-year collapse in federal government obligations, a line item that speaks directly to the broader uncertainty around US public-sector technology spending. That federal drag is real, and the stock's 18% one-month gain suggests much of the positive re-rating has already been priced in.
The earnings reaction pattern from July 22 is notable context. The stock fell 9.9% on the day of the print, then recovered 13.4% over the following five sessions — a whipsaw that tracks the pattern of shorts covering into a post-earnings dip. That dynamic appears to have continued into this week. With the next earnings event not scheduled until October 28, the next 10 weeks offer a longer runway for the market to settle the bull-bear argument: whether the federal revenue deterioration is a structural drag or a transient headwind will likely determine whether the short re-accumulation that ran through most of July returns, or whether the current wave of covering marks a genuine regime shift.
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