ServiceNow heads into its May 21 earnings report with the sharpest options skew toward calls it has produced in at least a year — and a short position that has quietly doubled in size over the past month.
Options traders have turned conspicuously bullish into the print. The put/call ratio has dropped to 0.70, almost 2.6 standard deviations below its 20-day average of 0.77 — near the lowest reading in the past 52 weeks. That divergence from recent norms signals heavy demand for upside exposure rather than downside protection, a meaningful contrast to the defensive posture typically seen ahead of high-profile software earnings.
Short interest complicates the picture. The float on loan has roughly doubled over the past month, climbing from around 2.8% to nearly 4.9% of free float — a rapid build for a mega-cap software name. The week ending May 8 saw the sharpest single-week jump, adding more than 10 million borrowed shares. Yet the lending market is not stretched. Borrow cost has eased sharply to 0.25%, down roughly 32% over the past month, and availability remains loose. Those conditions suggest the short build reflects a deliberate positioning decision rather than any squeeze dynamic.
The fundamental debate centres on two competing ServiceNow narratives. Bulls point to an accelerating AI business, NNACV growth of 9% year-over-year, and a credible path toward organic subscription revenue growth above 17% by FY27. Bears focus on the largest sequential drop in Contracted Remaining Performance Obligations in the company's history, a federal business where obligations fell roughly 72% year-over-year, and a 35% decline in total open headcount — all signs of a demand environment losing momentum in key verticals. Analyst coverage remains overwhelmingly positive, with 33 buy ratings and a consensus target around $143. Recent actions have been muted: Bernstein lifted its target modestly to $236 while staying at Market Perform, and Barclays nudged its Overweight target to $134. The wide dispersion between targets ($109 at the low end versus $236 at the high end) maps almost exactly onto the bull-bear divide on AI monetisation timing. Note that some targets sit well above the current $95 price level, reflecting varying assumptions on when AI-driven revenue acceleration materialises. The stock itself has recovered well, up 8% over the past month and 5% on Friday alone, outperforming peers: gained 8% on the day while and added around 3-5%.
Past prints offer limited comfort to either camp. The most recent comparable event in late April triggered a 12-15% single-day decline across two separate dates in the history, suggesting the stock can move violently on guidance. The May 21 report is therefore less a test of whether ServiceNow is growing and more a test of whether its federal exposure and CRPO trajectory are stabilising — or still deteriorating — at a pace that justifies the recent recovery in the share price.
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