Here's How We'll Adjust Our ServiceNow Price Target for Stock Split
We view the upcoming 5-for-1 as only cosmetic. Plus, let's discuss last week's acquisition announcement.
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When ServiceNow (NOW) reported its most recent quarterly results, the management team said the company’s Board of Directors approved a 5-for-1 stock split, and a special meeting of shareholders would be held on December 5 to approve the split. As you can see by today’s date, December 8, we’ve passed that meeting date, and the shareholders approved the 5-for-1 split.
What this means is each shareholder of record at the close of market on December 16 will receive four additional shares for each share of NOW common stock held as of that date. Those additional shares should be reflected in shareholder accounts on or about December 17, with trading expected to begin on a split-adjusted basis on or about December 18.
Taking that into account, when the 5-for-1 split becomes effective, we will see the NOW share price adjusted, and we will adjust our current price target from $1,200 to $240.
We continue to see ServiceNow benefiting from continued cloud adoption as well as larger enterprise adoption and usage of AI. Comments last week from Amazon (AMZN) and Salesforce (CRM) pertaining to enterprise moving past initial AI sampling and focusing more on productivity and other synergies lines up with the signals we’ve shared with you. As that further matriculates, we should see it favorably influence pricing and margins inside ServiceNow and others, such as Palantir (PLTR) .
In Case You Missed It
Meanwhile, let’s take a minute to discuss a ServiceNow headline from last week you may have missed. The company announced it will acquire identity security provider Veza, a move that should strengthen ServiceNow’s identity security services and enable consistent and auditable access governance across connected applications.
Currently, Veza serves nearly 150 global enterprise customers in banking, hospitality, and fast-moving consumer goods, with 230 employees globally. Compared to ServiceNow’s headcount, which is around 27,000, that’s a small acquisition, but it’s the ability to cross-sell software and services that matters more. And as we know, security is a growth industry, hence our position in the First Trust Nasdaq Cybersecurity ETF (CIBR) .
At the time of publication, TheStreet Pro Portfolio was long NOW.
