ServiceNow enters September with short sellers pausing their retreat — a notable shift from the aggressive unwinding that defined August.
Last week's note described a short squeeze in slow motion, with SI halved over 30 days as bears capitulated into strength. That trend has now stalled. Short interest edged up roughly 2% on Tuesday to 28.7 million shares, or 13.8% of float — still down 13.5% on the week and nearly 49% below the mid-July peak, but the daily direction has flipped. Bears who survived the August squeeze are no longer running. The stock itself delivered a mixed signal: up 12.5% on the week, but down 3.4% on Tuesday alone to close at $142.90. That Tuesday pullback, the first meaningful down-day after a blistering month, appears to have emboldened the remaining short base just enough to add.
The lending market tells a calmer story and hasn't meaningfully shifted since last week. Availability remains extraordinarily loose at roughly 5,458% of current short interest — around 882 million shares available to lend against fewer than 29 million borrowed. Cost to borrow is a negligible 0.44%, up modestly from the week prior but still barely registering as a friction cost. There is no stress in the borrow pool. The options market is a shade more cautious: the put/call ratio has crept to 0.926, about 1.6 standard deviations above its 20-day average of 0.891. That's elevated but not extreme — the 52-week high is 1.17. The mild defensive tilt in options aligns with the Tuesday sell-off, but it reads as routine hedging rather than a conviction bearish shift.
The Street is broadly constructive, though with a telling spread in targets. B of A Securities raised its target from $130 to $150 less than two weeks ago while holding its Buy rating, and Wells Fargo lifted from $160 to $175 with an Overweight. Those moves imply modest upside from current levels. But Macquarie's Neutral sits with a $110 target — well below the current price — and Bernstein's Outperform carries a $248 target, nearly 74% above where the stock trades. That $110-to-$248 range captures the genuine disagreement on the name. The consensus mean target of $142 is almost exactly where the stock closed Tuesday, meaning the average analyst sees no near-term upside even with a broadly positive skew in ratings. Valuation has expanded materially: the P/E multiple has gained more than 4 points over 30 days, and EV/EBITDA has risen by a similar margin. Bears pointing to stretched multiples have data on their side.
The fundamental debate remains unresolved. Bulls cite the 9% year-on-year NNACV growth and a credible path to accelerating subscription revenue as AI platform demand broadens beyond IT service management. Bears counter with the CRPO guidance miss — a $207 million sequential shortfall described as the largest in the company's history — and the collapse of the Federal Government business, down 72% year-on-year. That combination of stretched multiples and weakening Federal exposure is the core of the short thesis for the 13.8% of float still on the wrong side of a 28% monthly rally. The ORTEX short score at 31.2 is low, consistent with a stock where short pressure has eased materially, though the score has been drifting very slightly upward over the past few sessions — mirroring the stabilisation in SI levels.
Among peers, CRM had an extraordinary week, up 25.5%, while PD gained 14.6% — both outrunning NOW's 12.5% gain. ASAN, MNDY, and FRSH each added 3.5–4.7%, and ADBE and DOCU came in around 4–7%. NOW's gain was solid but not the standout in its peer group, which matters because some of the short covering this month was likely macro-driven across the software complex rather than ServiceNow-specific. The next read on whether the bear thesis still has legs comes at the October 28 earnings print — the last quarterly report in July saw the stock drop nearly 10% on day one before recovering 13% over the following five days, a pattern that may inform how the remaining shorts are sizing their positions into Q3 results.
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