ServiceNow Stock Just Plunged More Than 20% in a Single Day. Here's What It Did After Its Other Biggest Drops.

ServiceNow's (NOW) stock price took a significant plunge of more than 20% on a single day, with shares currently trading near $112, down approximately 25% from Wednesday's close of $150.13. This marks the company's worst day since its initial public offering in 2012, following the release of its third-quarter results. The company reported a strong 21% increase in subscription revenue to $3.99 billion, surpassing management's guidance.

However, the concern lies in the outlook, as ServiceNow guided for a fourth-quarter growth of just 18.5% in current remaining performance obligations (cRPO), which is under the contract revenue already recognized within a year. Despite such sharp drops in the past, ServiceNow's stock has recovered from most of its worst days before.

For instance, six months after the April 23 drop, shares closed at $158.96, up around 88% from the $84.78 closing price. Similarly, after a 16% loss on January 28, 2016, the stock gained around 20% in the next six months and about 42% in the following year. However, there are exceptions where a drop did not lead to a quick recovery, such as a 11% decline on January 30, 2025, which saw a 42% decrease a year later.

The company's CFO, Gina Mastantuono, attributed part of the fourth-quarter slowdown to the early renewal of some contracts, which negatively impacted cRPO growth in Q4. Despite this, the company expects a 21.5% rise in constant currency subscription revenue for the fourth quarter, slightly higher than the third quarter's growth rate.