ServiceNow Inc (NYSE: NOW) is in focus on Wednesday after Hedgeye issued a short call on shares of the IT management company based out of Santa Clara, California.
ServiceNow stock could tank 30%The independent investment research firm is concerned that the extent to which the remaining addressable market of ServiceNow will become a reality by the end of this year may be limited.
On Wednesday, Hedgeye analyst Andrew Freedman warned of a 30% downside in $NOW and said:
NOW’s assertive pricing and bundling tactics will be met with greater pushback in the next round of renewals as the company attempts to pass through another ~30% price increase onto customers.
ServiceNow is scheduled to report its quarterly results on January 24th. Consensus is for it to earn $1.10 a share versus 88 cents per share a year ago.
I can always count on @Servicenow chief strategy officer Nick Tzitzon for a thoughtful and transparent conversation and today’s chat here in Davos didn’t disappoint. $NOW continues to deliver outsized results on the back of demand for enterprise transformation. #Davos2024 pic.twitter.com/0i3lCImFaC
— Daniel Newman (@danielnewmanUV) January 17, 2024Why else is Hedgeye dovish on $NOWFreedman dubbed ServiceNow a new short idea today also because incremental features in its Vancouver release failed to deliver efficiency gains that investors expected out of Gen AI.
Even though there is much left on the AI product roadmap in 2024 and beyond, we believe investors will be disappointed in NOW’s ability to monetise.
Short interest in $NOW currently sits at 1.43% only. Also on Wednesday, Bill McDermott – the chief executive of ServiceNow said “it’s unbelievable how [AI] generates productivity”.
Watch here: https://www.youtube.com/embed/B9pLZiIgXEY?feature=oembedHe made the remark in his interview with CNBC at the World Economic Forum in Davos. Wall Street currently has a consensus “buy” rating on the tech company.
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