Analysts Chase the Rally as NOW Closes the Gap Before Earnings

Short sellers have continued to trim, extending the retreat that was already underway in last week's note. Short interest now runs at 13.2% of free float, down from around 15% in mid-September and off peaks of roughly 30 million shares earlier that month. The week-on-week decline is modest at 1.8%, but the sustained direction is clear. What makes the short positioning more interesting is the context: despite the pullback in shorts, 13% of float is still a meaningful overhang for a company this size. Borrow conditions, though, carry no alarm signals. Availability is at 8,327%, meaning the lending pool is vastly larger than actual demand for borrows. The cost to borrow has nudged up 13% on the week to 0.42%, but that remains negligible in absolute terms. There is no squeeze mechanics building here. Options positioning is equally quiet, with the put/call ratio at 0.91, essentially flat against its 20-day average and carrying a z-score near zero.

The bull and bear cases for NOW remain structurally unchanged from what drove the stock's earlier volatility this year. Bulls point to the FY25 NNACV figure of $2.332 billion, up 9% year-on-year, and a pathway for organic subscription revenue growth toward 17% by FY27, supported by AI platform expansion. Bears have not forgotten the Q2 print: the record $207 million shortfall in contracted remaining performance obligations, federal business obligations down 72% year-on-year, and a 33% drop in open sales positions within the quarter. The EV/EBITDA multiple has held near 19x with little 30-day movement, while the P/E of 28.8x has compressed slightly over the past month. The short-score rank of 72 and days-to-cover rank of 69 both reflect above-average but not extreme positioning. EPS surprise scores (34th percentile) and analyst recommendation differential (49th percentile) are both middling, consistent with a stock where the Street is broadly constructive but not uniformly confident.

Retail attention is notably low. The Wikipedia views signal is running at a z-score of minus 2.1 against NOW's own 90-day history, a reading from mid-September that puts it in the bottom tail of recent attention. That is unusual for a stock that is up 6% on the week, and may reflect that the move is being driven by institutional re-rating rather than any retail momentum.

The October 28 earnings date is 21 days away. The last print saw the stock fall nearly 10% on the day before recovering 13% over the following five sessions. With analyst targets now clustering between $150 and $175 and the stock at $138, the question heading into that release is whether the federal and CRPO headwinds that spooked the market in July are stabilising or worsening, and whether the AI expansion narrative has enough near-term revenue velocity to carry the valuation at its current level.