ServiceNow (NOW) sank over 12% in midday trading on December 15, 2025, marking its steepest single-day decline in more than a year as investor concerns mount over aggressive acquisition strategies to fuel growth.
- NOW stock dropped 12.3% on December 15, 2025, its worst single-day decline in 11 months
- Market cap lost over $18 billion in value during the session
- Q3 2025 revenue: $2.38 billion, up 11% YoY but below consensus
- Q4 2025 revenue growth guidance: 9%-10%, down from 12% in prior quarter
- Enterprise value-to-revenue multiple at 17.8x, significantly above sector average
- Analyst downgrades across major firms due to M&A and growth risks
ServiceNow's shares tumbled to a low of $524.30 during the session, erasing over $18 billion in market value, as traders reacted to rumors of an expanded M&A playbook aimed at reversing slowing revenue growth. The sell-off followed a string of analyst notes suggesting the company may pursue larger, more strategic acquisitions in the enterprise workflow and AI-driven automation spaces, particularly targeting niche SaaS providers with strong AI integrations. The move comes amid a broader slowdown in ServiceNow’s quarterly growth trajectory. In its latest earnings report, the company posted revenue of $2.38 billion for the third quarter of 2025, up 11% year-over-year, but below the 13.4% consensus forecast. Adjusted non-GAAP earnings per share came in at $4.12, slightly ahead of expectations. However, guidance for Q4 2025 signaled a contraction in growth momentum, with projected revenue growth of just 9%-10%, down from 12% in the prior quarter. Investors are now focused on the sustainability of ServiceNow’s current business model, especially as its software-as-a-service (SaaS) platform faces increasing competition from Oracle, Salesforce, and emerging AI-native vendors. The perceived risk of overpaying for acquisitions—potentially pushing the company’s valuation above $250 billion—has triggered skepticism, particularly given the company’s current enterprise value-to-revenue multiple of 17.8x, well above the sector average. The stock decline has rippled through the broader tech and SaaS index, with the Nasdaq Composite dipping 0.6% on the day. Investors in ETFs with significant exposure to enterprise software, including the Invesco QQQ Trust (QQQ) and the Technology Select Sector SPDR Fund (XLK), have seen their portfolios impacted. Analysts at major banks have downgraded ServiceNow to neutral from overweight, citing execution risks and elevated leverage from potential dealmaking.