Chart of the Day: Will Earnings Answer the Questions on ServiceNow?
The stock has been hit hard as the economy starts to cool. What will Wednesday's earnings report tell us?
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Following a pretty strong earnings report in January we saw ServiceNow NOW get ambushed by sellers. One day after the next the stock was down sharply on heavy volume. Nobody wanted to hold the shares any longer, and while the guidance provided back then was simply in line to a slight miss, we think the stock has been treated unfairly by the market.
As we know, however, our opinions don't mean much when the rest of the market is trending lower and taking the best quality names along with it. We simply have to ride out the storm and wait for better days, then make an assessment after the damage has been made.
ServiceNow stock remains in a downtrend but it appears a low may have been found earlier this month. That level is about $660 or so, which was tagged on some heavy volume days early in April. What does that mean? Simply after a 44% drop from the highs the last of the holders finally gave up and cut the stock. Enter the big money players with cash in hand to pick up the pieces.
Let's face it, ServiceNow is a high-quality business and is not going anywhere. We own it for that very reason. It may have been overpriced when trading above $1,000, but that has certainly changed now with the stock about 20% lower than those levels.
We see improvement in the indicators but the candles still reflect bearish. Wednesday's earnings report after the bell may help give us some clues to how their business is moving for the rest of the year and how tariffs might be a hindrance.
We like ServiceNow in TheStreet Pro Portfolio and rate it a One, or "buy at anytime."
At the the time of publication, TheStreet Pro Portfolio was long NOW.
