ServiceNow’s 5-for-1 Split Is a Signal for Investors to BuyWritten by Thomas Hughes. Published 11/2/2025.
Key Points- ServiceNow is on track for a stock split that investors should heed: stocks that split tend to see their share prices trend higher.
- AI demand drives results that, in turn, drive steadily increasing shareholder value.
- Analysts and institutional trends indicate solid market support and a potential 20% upside.
ServiceNow’s (NYSE: NOW) 5-for-1 stock split is a signal for investors to consider buying, as the rationale behind the move points to a sustained uptrend in the share price.
Already up more than 100% over the past three years and having delivered quadruple-digit gains over the long term, this stock can continue to climb because its entrenched technology business remains in demand, is expanding, and continues to drive shareholder value.
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Ultimately, the split is intended to make the shares more accessible — a $1,000 price tag is difficult for many investors to absorb. It’s not that the business isn’t worth the price; rather, expensive single-share stocks make portfolio diversification and regular purchases more challenging.
ServiceNow: Beat-and-Raise Quarter Affirms Outlook for 20% UpsideServiceNow delivered a solid Q3, with AI demand helping to drive the business. The company reported strength across its product groups, with net revenue of $3.41 billion, up nearly 22% year-over-year. Results modestly exceeded expectations, helped by an 18% increase in large clients and meaningful bottom-line outperformance. Internal indicators, including remaining performance obligation (RPO) and current RPO, are up 24% and 20.5%, respectively, suggesting momentum should continue and growth could accelerate.
Margin news was also favorable. The company absorbed some gross margin pressure but offset it through spending discipline and efficiency improvements. The net result was a 180-basis-point improvement in operating margin and adjusted EPS of $4.82 — $0.55 above MarketBeat’s consensus. Management also raised guidance, forecasting revenue to grow at roughly a 20% pace for the year, up from prior guidance and ahead of consensus.
The analyst response was mixed in the immediate aftermath — with one price-target increase and one decrease within the first 18 hours — but overall the coverage looks constructive. Trends include growing analyst coverage, a solid support base (more than 33 analysts tracked by MarketBeat), a firm Moderate Buy rating, and an upward drift in the consensus price target. As of late October, the consensus implies roughly 20% upside relative to key support levels, and recent revisions are consistent with that view.
ServiceNow Drives Share Price Increases With Equity GainsServiceNow does not pay dividends and has not been a large share repurchaser in recent years, choosing instead to reinvest cash into the business. The key takeaway is that those investments have consistently generated equity growth that supports a higher stock price over time.
Balance-sheet highlights at the end of Q3 reflect heavy 2025 reinvestment: cash equivalents and total assets are down year to date, but this is offset by reduced liabilities, steady debt levels, and a nearly 18% increase in equity. Continued reinvestment and sustained demand for AI automation and business services are expected to drive further equity gains into 2026.
Institutional activity shows alignment between ServiceNow’s strategy and large shareholders. Institutions own nearly 88% of the stock and, on balance, have been buyers this year. There was some caution heading into the Q3 report — October activity was light and showed modest selling — but the group will likely return to a more constructive stance now that results and guidance are confirmed.
The chart supports a positive outlook. ServiceNow’s stock has largely consolidated over the past year but remains in an overall uptrend. October trading established strong support at critical moving averages, and technical indicators have swung toward a trend-following signal. The likely near-term outcome is that NOW will advance in November, potentially testing the $1,050 to $1,100 range before the early-December stock split. |
