ServiceNow Valuation Hits 61x P/E After 50% Stock Decline to $102
ServiceNow shares have plunged roughly 50% from a $211 peak to about $102 despite 20% annual revenue growth. First-quarter subscription revenue rose 22% to $3.67B with EPS of $0.97 beating estimates, and the stock trades at 61x P/E as AI tools target 30% of new contract value.
1. Stock Performance and Revenue Growth
ServiceNow shares fell about 50% from a $211 peak to near $102, reflecting a 31% year-to-date drop even as the platform sustains roughly 20% revenue growth. Investor concerns over AI displacing per-seat licensing have pressured the stock despite stable business operations.
2. Q1 Financial Highlights
In Q1 2026, subscription revenue reached $3.67 billion, up 22% year-over-year, while earnings per share hit $0.97, exceeding the $0.80 consensus. Total revenue for 2025 was $13.28 billion, generating $4.6 billion in free cash flow, a 34% increase.
3. Valuation Metrics
At around $102 per share, the stock trades at a forward P/E multiple near 61x versus a seven-year average above 299x. This reduction in valuation marks it as potentially the cheapest level relative to its long-term growth trajectory.
4. AI Strategy and Outlook
Management forecasts AI-driven products will contribute 30% of new contract value, with initiatives like AI Specialist agents and ServiceNow Otto resolving tickets autonomously. The next key test is the July 22 earnings call, where guidance will be scrutinized for AI adoption impact.