ServiceNow, Inc. (NOW) Stock: Why It’s Falling

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ServiceNow, Inc. (NOW) is working its way for to the top in the market today. The company, focused in the technology industry, is presently trading at $228.34 after heading down -5.21% so far in today’s session. In terms of technology companies, there are quite a few aspects that have the ability to generate price movement in the market. News is one of the most common reasons for movement. Here are the recent headlines associated with NOW:

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Oct-22-19 06:51PM Dow Jones Futures: Stock Market Rally Hits Ceiling: Nike, ServiceNow, Chipotle, Snap, Texas Instruments Are Key Movers
05:43PM ServiceNow Appoints Bill McDermott CEO, Succeeding John Donahoe
05:17PM ServiceNow Stock Plunges As CEO Donahoe Departs To Lead Nike
05:01PM SAP’s Bill McDermott to replace John Donahoe as CEO of ServiceNow
05:01PM Nike Has a New CEO, and ServiceNows Stock Is Tumbling

Nonetheless, when making an investing decision, prospective investors should look into much more than news, this is especially the case in the ever evolving technology industry. Here’s what’s happing when it comes to ServiceNow, Inc..

Recent Trends From NOW

Although a move down in a single session, like what we’re seeing from ServiceNow, Inc. may cause fear in some investors, a single session move by itself should not be the basis of a decision to, or not to, invest in a stock. It is always important to dig into trends just a single session. When it comes to NOW, below are the trends that we have seen:

  • Past 5 Trading Sessions – In the past five trading sessions, NOW has seen a change in price amounting to -16.74%.
  • Monthly – The performance from ServiceNow, Inc. in the last month works out to -14.48%.
  • Past Three Months – In the past quarter, the company has generated a ROI that works out to -23.17%
  • Past Six Months – In the last six months, we’ve seen a performance that equates to -5.92% from the stock.
  • YTD – Since the the first trading session of this year NOW has resulted in a return of 28.24%.
  • Annually – Finally, over the last full year, we have seen a change amounting to 28.90% out of NOW. Throughout this period, the stock has traded at a high price of -24.68% and a low price of 54.67%.

Ratios To Watch

Looking at various key ratios having to do with a company can give prospective investors a view of how dangerous and/or potentially profitable a stock pick may be. Here are some of the most important ratios to think about when looking at NOW.

Short Ratio – The short ratio is a measure of short interest. The higher this ratio, the more investors have a belief that the stock is headed for declines. Throughout the sector, strong technology stocks tend to come with a lower short ratio. On the other hand, we tend to see a lot of short squeezes in the industry. Nonetheless, when it comes to ServiceNow, Inc., it’s short ratio is 4.02.

Quick & Current Ratios – The quick and current ratios are tools that are used to measure liquidity. Essentially, they measure If a company is able to pay for its debts when they come due using quick assets or current assets. Because in tech, many companies are reliant on continued investor support as they work to bring new technologies to market, the current and quick ratios can look damning. Nonetheless, several good picks in the technology sector come with positive current and quick ratios. As it relates to NOW, the quick and current ratios come to 1.10 and 1.10 respectively.  

Book To Share Value – The book to share value ratio compares the value of assets currently owned by the company to the share price of the stock. In this case, that ratio is 6.75.

Cash To Share Value – Finally, the cash to share value comparison compares the amount of cash the company has on hand to the value of the company’s stock. In the case of NOW, the cash to share value ratio is 8.43.

What Are Big Money Players Doing With ServiceNow, Inc.

An interesting fact I have learned in my short period in existence has been that smart investors tend to follow big money players. Usually, investors that want to keep the risk down will pay close attention to moves made by institutions and insiders. So, what does the big money picture look like in regard to NOW? Here’s what’s happening:

Institutions own 93.50% of the company. Institutional interest has moved by 0.02% over the past three months. When it comes to insiders, those who are close to the company currently own 0.10% percent of NOW shares. Institutions have seen ownership changes of an accumulative -57.91% over the last three months.

Analyst Opinions Of ServiceNow, Inc.

Although it’s not a good idea to blindly follow the thoughts of analysts, it is a good idea to use their opinions when validating your own opinions when it comes to making investment decisions in the tech sector. Here are the most recent moves that we’ve seen from analysts when it comes to NOW.

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Oct-16-19 Downgrade Morgan Stanley Overweight → Equal-Weight $250 → $267
Oct-03-19 Initiated SunTrust Buy
Sep-03-19 Resumed RBC Capital Mkts Top Pick $300 → $320
Aug-21-19 Upgrade Stifel Hold → Buy $290 → $320
Jul-25-19 Reiterated BofA/Merrill Buy $300 → $330

What We’ve Seen In earnings results

At the moment, analysts are expecting that throughout the full year, earnings per diluted share will come in at $4.29. In the current quarter, analysts see the company producing earnings in the amount of $0.88. Over the last 5 years, NOW has generated revenue in the amount of $43.80% with earnings coming in at 22.70%. On a quarter over quarter basis, earnings have seen movement of 80.00% and revenue has seen movement of 32.10%.

Looking At Share Counts

Another point of interest that seems to be important to investors is the amount of shares of a company that are outstanding and currently available. At the moment, there are 196.23M shares of ServiceNow, Inc. outstanding. Shares outstanding refers to the total amount of shares of a stock that exist. As far as the float goes, or the amount of shares that are actually available on the retail market, NOW has a float of 185.79M.

Since we’re on the topic of share counts, there’s another relevant piece of data that you might find interesting. That would be the short percentage of the float. Those who sell shares short believe that the value of the stock is going to decline. When there’s a high short percentage of the float, generally considered to be anything over 40%, it’s a giveaway that the stock is likely headed for sharp declines ahead. Nonetheless, through my research, I’ve come to the conclusion that any short percent of the float over 26% is a risky bet. When it comes to NOW, the short percent of the float is 4.08%.

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