ServiceNow heads into its May 21 earnings report with short sellers having materially rebuilt positions over the past six weeks — against a backdrop of two consecutive post-earnings routs and a stock that has yet to fully recover.
The short interest story is the clearest signal this week. Estimated short interest has climbed to roughly 3.84% of free float, up from around 2.74% in mid-March — a near-40% increase in six weeks. The move accelerated sharply in the final week of April, when short interest jumped from approximately 2.86% to 3.99% in a single session on April 23–24, likely timed around the prior earnings event. That level has held, consolidating just below 4% into this week. The borrow market, however, tells a contrasting story: cost to borrow has essentially collapsed to 0.14% annually — down more than 70% over the past month — and availability remains wide. That combination means the rebuild in short interest is happening almost frictionlessly. There is no squeeze pressure, no crowding tension in the lending market. Shorts have added exposure cheaply and without competition.
Options positioning is similarly unhurried. The put/call ratio of 0.77 is fractionally below its 20-day mean of 0.78, and the z-score of -0.65 signals call skew rather than downside protection. That is notable given the earnings calendar: the market is not yet hedging aggressively for May 21. Whether that changes as the date approaches is one of the more interesting setups to track — the PCR has been meaningfully higher (52-week high: 1.17), so there is room for a significant defensive rotation if sentiment shifts.
The Street remains constructive on paper but deeply divided on valuation. Bernstein raised its target to $236 on May 6 while keeping a Market Perform — a technically bullish move from a cautious posture. Barclays and Evercore both nudged targets higher (to $134 and $150 respectively), while Macquarie and RBC held neutral ratings with targets of $109 and $121, sitting close to current levels. The mean analyst target of around $145 implies roughly 58% upside from $92, an unusually wide gap that reflects genuine disagreement rather than consensus direction. The bull case — FY25 NNACV growth of 9% year-on-year, AI expansion, and a credible path to 17%-plus subscription revenue growth by FY27 — is being weighed against a bear case that is harder to dismiss: CRPO guidance that showed the largest sequential decline in the company's history, federal government obligations down 49% sequentially and 72% year-on-year, and open sales positions down 33% in a single quarter. Valuation multiples have compressed: the P/E has shed 2.4 points over the past 30 days to 20.8x, and EV/EBITDA has fallen roughly a point over the week to 13.9x. The analyst recommendation divergence factor score ranks in the 94th percentile — a numerical confirmation that the Street has rarely been this split on NOW.
The earnings history makes the May 21 print consequential. The stock fell 12.5% the day after the April 23 report and was down 14.3% five days later. The April 22 event produced a 15.3% single-day decline with an 11.2% five-day follow-through. Two consecutive prints of that magnitude — both double-digit day-one drops — explain why short sellers have been quietly rebuilding. CEO Bill McDermott's open-market purchase of approximately $3 million of stock in late February near $105 remains on the ledger as a countervailing signal, though the stock has since traded below that level for most of the subsequent period.
Among peers, the divergence this week is worth noting. TEAM (Atlassian) surged 32% on the week following its own earnings, and HUBS added nearly 9%. WDAY and ADSK gained 6% each. NOW's 1.7% weekly gain looks restrained by comparison — the sector recovery after last month's broad tech selloff is happening, but NOW is lagging meaningfully. Whether that reflects ongoing digest of the April print, the approaching re-test on May 21, or the specific federal-spending concerns outlined in the bear case, the price action points to a name where the market is not yet willing to price in a full sector rebound.
What to watch into May 21: whether the put/call ratio rotates back toward defensive levels as the earnings date closes in, whether cost to borrow begins to tick back up as demand for the short grows more urgent, and — most critically — whether management can address the federal revenue deterioration and CRPO trajectory that has so far kept the stock trading 26% below the analyst mean target.
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