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Why ServiceNow Stock Has Been Volatile

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NOW stock has fallen 1.5% this month

We’ve seen how ServiceNow (NOW) has generated impressive returns over the last few years. The stock fell 3% in 2016 and then rose 69% in 2017. Since the start of 2018, it has risen ~48%. Although the stock has risen 57% in the last 12 months, ServiceNow has undergone several corrections in the past year and has bounced back quickly.

ServiceNow was also impacted by the sell-off last week, falling ~12%. It has since recovered, rising 6.5% on October 16 to close at $192.72.

In comparison, the SPDR S&P 500 ETF (SPY) and the PowerShares QQQ Trust, Series 1 ETF (QQQ) have returned 6.5% and 14.4%, respectively, in 2018. The S&P rose 12% in the last year and 47% in the last three years. QQQ has risen 20% in the last year and 69% in the last three years.

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Analyst recommendations

Of the 34 analysts tracking ServiceNow, 30 have recommended a “buy,” four have recommended a “hold,” and none have recommended a “sell” for the stock. Analysts’ 12-month average price target for ServiceNow is $209.11, and the median estimate is $210. ServiceNow is trading at a discount of 9% to analysts’ median estimate.

Moving averages

On October 16, ServiceNow closed the trading day at $192.72. Based on that price, the stock was trading as follows:

  • 3.5% above its 100-day moving average of $186.23
  • 1.3% above its 50-day moving average of $190.18
  • 2.4% above its 20-day moving average of $188.24

MACD and RSI

ServiceNow’s 14-day MACD (moving average convergence divergence) is -0.78. A stock’s MACD is the difference between its short-term and long-term moving averages. ServiceNow’s negative MACD score indicates a downward trading trend.

ServiceNow has a 14-day RSI (relative strength index) score of 54, which shows that the stock is trading close to overbought territory. The stock has rallied since the recent technology sell-off. An RSI score above 70 indicates that a stock has been overbought, while an RSI score below 30 indicates that a stock has been oversold.

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