Tom Nash on $NOW (Oct 29, 2026)
The speaker is optimistic about ServiceNow although it is not in his top five list today. He sees its 18% one-day drop as fear-driven, not business deterioration: revenue grew 20.5%, free cash flow 39%, liquidity is 2.5 times debt, rule-of-40 about 60, AI growing 70%, and 24 times forward earnings. He calls the EPS miss (0.27 vs 0.35) and RPO growth of 8.5% vs 19% expected minor, leaving a great company at an 18% discount.
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And "Service Now" fell by 18%.
Because yesterday we saw a company like "ServiceNow", which is not on my list by the way, I'm just mentioning it, but I have to show it to you . Look, " Service Now" is a great example.
It's not in my top five stock list today, but I'm definitely optimistic about it. ServiceNow's stock experienced an 18% drop in one day. Why? Well, if you look at what they announced yesterday, it's very confusing.
Revenue growth of 20%, or 20.5% in fact. Free cash flow grew by 39%. They outperformed in revenue but missed expectations in earnings per share. They announced 0.27 instead of 0.35.
Good. Their remaining performance obligations also increased by 8.5% instead of the 19% they had expected. Therefore, the growth in performance obligations was half a percentage point lower , and earnings per share were slightly lower.
But revenues are growing primarily, and they have outperformed in revenues, free cash flow has increased by 40%, they have liquidity equivalent to 2.5 times their debt , they are achieving a "rule of 40" ratio of about 60, and the stock is currently trading at 24 times forward earnings.
Their artificial intelligence sector is growing at a rate of 70%. So, you have strong quality, a very solid competitive advantage, they are keeping up with the AI trend, and the stock has become cheaper overnight.
Why? Due to market sentiment, technical factors, and minor failures in percentages and decimal places. No one is looking at the actual business. This is a great company that suddenly gives you an 18% discount overnight because of fear, panic, and emotional reactions.