$NOW · Financial Education · 2026-10-28

ServiceNow is being brutally attacked. This arrow fell from a slope. I mean, it was already significantly low during the trading session. It has dropped 3%, but add more to that, who knows how much it will reach, maybe 15 to 20% after trading hours.

Oh, that's harsh, isn't it? Service Now. This is a stock I just took profits from in the general account a few days ago, and I covered that here on the channel. I have also covered that within the private collection.

But I still entered these profits with a six-figure position, $100,000, a 52% increase in this stock. I can tell you that the day after tomorrow, I won't be making a 52% profit on this stock.

Ah, Service Now. Buy or sell? What are we doing here?

Okay, as for "Service Now", here's the thing. This corporate company has declined significantly and clearly to an exaggerated degree. We'll see a drop of 20% or so, won't we? Adjusted earnings for the third quarter came in at one dollar per share.

The average analyst estimate was $1.02. So they missed the mark a little. Subscription revenue guidance for the fourth quarter ranged between $4.24 billion and $4.255 billion. Wall Street expectations were at $4.25 billion.

Listen, man. You know that this stock was burning with enthusiasm. It was very popular. I mean, it went up from $80 to $150, and even exceeded $150 before these profits. You can't do that with a stock that has all that momentum.

You cannot provide revenue forecasts that are almost in line with expectations while failing to deliver earnings per share. You can't do that, man. You need to deliver better results than that.

Good? You know, I always tell you that I never sugarcoat the truth with any of my partners, right? I will always evaluate them with the same rigor as any other companies, and sometimes even more rigorously.

You cannot beautify this situation. This is a poor performance from "Service Now".

Right now, the revenue is good. Growth of 21%. It's good, but it's nothing exceptional. They don't have a huge acceleration in revenue that makes you say, "Wow, it's much better than we expected." 21% is roughly what you were expecting before these profits, isn't it?

But look at this company's expenses, okay? The cost of subscription revenue increased by 58%. The total cost of revenue increased by 56%. Therefore, gross profit increased by only 10% year-on-year.

Isn't that so? Then you had a 20% increase in sales and marketing expenses. We are talking about a full 10 percentage points higher than gross profit growth. Isn't that so? Research and development.

Research and development expenses increased by 27% for the company on an annual basis. General and administrative expenses increased by 11% for the company on an annual basis. Therefore, it also outperformed gross profit growth.

The company's total operating expenses increased by 22% year-on-year. This resulted in a 33% decrease in operating income. Because the gross profit increased by only 10%, while you faced all those expenses, right?

The income from operations will be destroyed. Therefore, operating income is down by 33%. This is the problem here with "Service Now". It's not as if just one item is the problem with the expenses.

In fact, all of these expense items represent a problem. All of it, man. The company's revenue has dropped by 45% year-on-year. Diluted earnings per share decreased by 44%. I mean, if your revenue is growing by 21% while your net profit is decreasing by 44%, right?

This is not good. Not good at all. Especially when you consider that it wasn't due to a one-time accidental thing. It might be acceptable if it were a situation similar to Google where there is an incidental element, wouldn't it?

Where the valuation of your investments or something like that has changed and affected your earnings per share. This is a real problem with "Service Now". The whole thing, isn't it?

Here's the truth about the situation with "Service Now". Is the stock worth buying? In my opinion, he doesn't deserve that, man. He's not worth it. I should have left. I knew that.

I knew that. I recently sold a portion of this stock, and I was looking at the price and saying to myself, man, I should get rid of this stock, but I didn't the hell do it. I wanted to go out.

He missed his chance to get out. I will probably sell the rest. The problem now is that I will sell at a much lower price. I'll still make a good profit from the stock, won't I?

Let's be very clear about this point. The stock won't drop 50% tomorrow, but I would have made a lot of money if I had gotten rid of all my shares as I wanted. Ah, I mean, it's disappointing.

It is frustrating because the numbers are disappointing. Even when you look at expected obligations and the like. Even then, those numbers are depressing. There is nothing to justify Bill McDermott's big talk at communications conferences.

In every call and interview he conducts, you think this company is going to achieve the best growth ever. Then you get to the results, and you find them disappointing, don't you?

There is nothing that makes you say, "Oh my God, wow, their growth is really taking off." And the only thing we see is moving. Let's be perfectly clear, it's their expenses. So he can say whatever he wants, but at the end of the day, we look at the growth rates and they are exactly as we expected.

There are no positive aspects, but the expenses look much worse than we expected. This creates an ugly situation with "Service Now", man. A very ugly situation, isn't it?

The problem with ServiceNow is that it trades at a very high valuation with very high expectations, and then they don't deliver anything exciting.

I mean, Bill is a good CEO. He's done a good job with ServiceNow over the years, hasn't he? But he talks a lot and doesn't back it up with actions. In my opinion, he simply doesn't back up his claims with numbers.

Um, you know, you can't give revenue forecasts that exactly match what everyone else was expecting. This is really disappointing, man. You know, for a company whose expenses are out of control like this.

If their expenses were under control, the situation would be completely different, because we would say: "Well, expenses are under control. Revenues are growing by more than 20%.

Great." This is not the current situation. We are seeing out-of-control expenses throughout the entire company. In everything, revenues seem to be "Oh, okay". So, the moral of the story here is, you know, that CRM's stock will also decline tomorrow because of this, right? This will pull all these types of stocks down.