ServiceNow heads into the final week of August with short sellers in full retreat — a dramatic reversal from a heavily contested position just one month ago.
The story of the past month is a short squeeze unfolding in slow motion. Short interest has been cut nearly in half over 30 days, dropping from roughly 58 million shares in mid-July to just under 29 million by August 25 — a 50% reduction that brings SI to 14% of float. That remains an elevated absolute level, but the direction of travel is unmistakeable: bears who built positions through July have been unwinding steadily, and the sharpest move came in a single session on August 25, when shorts fell 12.7% in one day. The borrow market reflects none of the stress you would expect from a contested name — cost to borrow is a negligible 0.45%, and availability is extraordinarily loose at nearly 5,800% of current short interest, meaning there are roughly 58 shares available to lend for every one already borrowed. This is not a squeeze setup; it reads instead as a one-sided capitulation by bears exiting into strength.
The price tells the same story from the other side. NOW is up 6.3% on the week and 28.6% over the past month, closing Tuesday at $127. Options positioning has drifted slightly less cautious, with the put/call ratio at 0.84 — just below its 20-day average of 0.87 and about 1.2 standard deviations below that mean — suggesting call demand has quietly picked up as the stock rallied. The PCR 52-week range runs from 0.60 to 1.17, so current readings sit in the middle, offering no particular alarm in either direction. Peers moved broadly in line: gained 4.9% on the week, added 6.0%, while lagged at 2.0% and was the lone decliner at -1.1%. NOW's 6.3% week-on-week gain places it in the upper tier of the software cohort, not an outlier.
The Street has been incrementally more constructive in August, though targets remain wide and the debate has not resolved. BofA Securities raised its target to $150 from $130 this week, keeping a Buy rating — the most recent bellwether move. Wells Fargo lifted to $175 from $160 in mid-August, maintaining Overweight. TD Cowen reiterated Buy at $140 without moving its target. The consensus mean target of $142.23 sits about 12% above the current price, implying the Street sees upside from here, though the range of targets is striking: Bernstein has an Outperform with a $248 target, while Macquarie holds Neutral at $110. The bull case centers on FY25 net new ACV growth of 9% and a credible path to subscription revenue growth exceeding 17% by FY27, with AI platform expansion as the accelerant. Bears point to the largest sequential CRPO decline in the company's history and a Federal Government revenue line that fell 72% year-over-year — a structural concern, not a quarterly blip, given ongoing pressure on federal IT budgets. Valuation multiples have re-rated upward with the rally: the P/E has expanded by roughly 4 points over the past 30 days to 26.7x, and EV/EBITDA has compressed slightly to 17.6x as EBITDA estimates have risen faster than the enterprise value. The ORTEX short score of 31 is low and drifting lower over the past two weeks, consistent with the short-covering trend rather than fresh bearish pressure.
The last earnings print, on July 22, produced a sharp -9.9% one-day decline followed by a 13.4% five-day recovery — a pattern suggesting that initial post-results selling was absorbed and reversed relatively quickly. With the next earnings event not until October 28, there is a nine-week runway before the market gets its next read on whether the Federal Government headwinds have stabilised or worsened. The short score, the borrow conditions, and the pace of short covering will each be worth watching over that window — particularly whether the capitulation in short interest stalls around current levels or continues toward more normalised territory.
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