ServiceNow heads into its October 28 earnings with a curious split: short sellers have been cutting positions for weeks, yet the stock is down 10% over the past month and trading at $129.94, well below where most analysts think it should be.
The short story is one of unwinding pressure, not building conviction. Short interest has fallen 7.5% over the past week to 13.3% of free float, and is down nearly 17% from a month ago, a sustained retreat from peaks above 30 million shares in mid-September. Availability is exceptionally loose at 7,925%, meaning there are roughly 79 shares available to borrow for every one already lent out. The borrow cost has edged up 17% on the week but remains negligible at 0.37%. None of this points to a squeeze, a crowded short, or any structural pressure in the lending market. The shorts that remain are not in distress. Options positioning reinforces the muted tone: the put/call ratio of 0.91 is almost exactly in line with its 20-day average, with a z-score near zero. Neither calls nor puts are dominating at the margin.
The Street, by contrast, is more animated than the calm positioning would suggest. Analyst targets have been moving sharply higher. Cantor Fitzgerald raised its target to $174 last week, maintaining an Overweight rating. Earlier in September, BTIG lifted to $170 and Needham to $155, both reiterating Buy. At $129.94, NOW trades roughly 11% below the consensus mean target of $145, implying the Street sees meaningful room to recover. The most aggressive bull on the register is Bernstein at $248, which is a significant outlier given current price levels. Macquarie, the lone neutral voice among recent movers, sits at $110, below the current stock price. Valuation multiples have eased: the P/E has compressed nearly 14% over 30 days to around 27x, and the P/B has come in by more than 13% over the same stretch to around 7.2x. The ORTEX EV/EBITDA of 18.1x has also drifted lower. For a platform that has historically commanded a steep premium, the multiple compression is meaningful context.
The bull and bear cases are unusually concrete. Bulls point to FY25 NNACV of $2.332 billion, 9% growth year-on-year, and a credible path to organic subscription revenue growth above 17% by FY27, driven by expansion beyond IT service management into customer service and HR. Bears focus on the largest sequential CRPO decline in company history, a 72% year-on-year collapse in federal government obligations, and a 35% drop in total open positions during the quarter. The federal exposure is the sharpest point of contention. Enterprise software broadly has softened: closest peers CRM and ADBE fell 3.4% and 2.1% respectively on the week, broadly consistent with NOW's 5.2% decline, though GWRE matched NOW's weakness almost exactly, down 5.3%. PD was the exception, gaining 3.2% on the week.
Insider activity from the past 30 days adds a minor note of caution. Open-market selling totalled around $1.75 million net over 90 days, with the President of Global Customer Operations selling 2,034 shares at $147.87 in late August, and a director selling 2,700 shares at $135.50 without a 10b5-1 plan. The Chief People Officer sold under a pre-arranged plan. None are headline-scale, but there are no open-market purchases to offset them. The August 17 transactions for CEO William McDermott were option exercises followed by tax-withholding sales, compensation mechanics rather than conviction trades.
The most recent earnings print, July 22, produced a sharp initial reaction: the stock fell nearly 10% the following day before recovering to a 13.4% gain over the subsequent five-day window. That pattern, a punishing initial reaction followed by a recovery, is the setup heading into October 28. With short interest easing, availability wide, and the Street carrying targets well above the current price, what matters most next is whether the federal headwinds in the July print were a one-quarter aberration or the start of a more persistent drag on the CRPO trajectory.
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