- NOW the stock lost 12.7% on Tuesday on negative guidance.
- CEO Bill McDermott is concerned about enterprise software investors with a negative outlook on the industry.
- ServiceNow’s long-term support is in the $ 350s- $ 360s.
ServiceNow (NOW) is and has become one of Wall Street’s favorite gaming software to date. The enterprise software firm offers a relatively wide range of manufacturing and corporate platforms dedicated to automating company tasks to save labor and time.
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However, a straightforward analysis of the company’s CEO’s macro environment, toppled shares on Tuesday, and now, Wednesday’s higher inflation figure threatens to return the massive software dealer to $ 360.
ServiceNow stock news
ServiceNow CEO Bill McDermott was interviewed on CNBC’s Mad Money program late Monday and said the massive negative environment emanating from a war in Europe, the highest inflation in 40 years, and rapidly rising interest rates were too simultaneously- once for most businesses. These distressing signs are leading businesses to close long -term technology investment projects and focus on more short -term projects.
“You’re at 41-year high inflation; the dollar is now at it’s highest in more than two decades; we have interest rates rising,” McDermott said. “People [are] worried about security. You have a war in Europe, so the mood is not good. “
McDermott indicated that concerns over these variables, along with the possibility of a recession, will reduce demand for some business software services next year. What McDermott probably didn’t realize was that his interview would drag down several enterprise software leaders including himself. Companies as varied as Twilio (TWLO), HubSpot (HUBS) at Salesforce (CRM) all filled in after the interview and at the next session on Tuesday.
BMO Capital Markets Analyst Keith Bachman seems to suggest that further selling in the sector is needed. McDermott is actually a high-profile tech executive, and so when he cries the analysts listen. Bachman was particularly focused on McDermott’s suggestion that the strong dollar would negatively affect many U.S. software providers in the coming quarters and that the European sales cycle would last. This means that many of these high achievers may miss revenue targets in the near term.
For its part, Service Today is known for constantly expanding the company’s customers and revenue.
The last four quarters of ServiceNow’s revenue and earnings
on Wednesday US CPI printing at 9.1% has markets still growing. With forecasts calling for headline inflation at 8.8%, it certainly won’t warm the hearts of tech executives who want the macro sphere to stop the fear train.
ServiceNow stock forecast
No need to look for more death cross scenario (50-day moving average crossing below the 200-day moving average). That happened on February 16. For the knife -catchers among us, the whole question is where is it NOW stock sell-off ends and where to enter the long trade.
For myself, the sweet spot definitely looks like demand zone between $ 352 and $ 363. From the weekly chart below, you can see how these regions worked as resistance in February 2020 and again as support in May 2020. That was before the stock left.
Compared to many enterprise software hot-shots that will reach more than 70% in 2022, NOW is somewhat more mature, somewhat more favored in institutions. NOW shares are down just 32% year to date. However, the stock dropped another 2% in Wednesday’s premarket, and it seems likely that this downtrend will continue until the mid- $ 300s are seen.
NOW weekly chart
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