ServiceNow stock price dived after earnings: buy the dip or sell the rip?

Core Viewpoint - ServiceNow's stock price has declined significantly following the release of its financial results, raising questions about whether to buy the dip or sell the rip [1] Financial Performance - ServiceNow reported fourth quarter revenue of $3.56 billion, a 21% increase from the same period in 2024, leading to an annual revenue of $13 billion, up 20% from 2024 [1] - The company's current remaining performance obligations (cRPO) rose to over $12 billion [1] - Guidance for Q1 revenue is projected between $3.65 billion and $3.655 billion, with an expected operating margin of 31.5% [1] - For the full year, revenue is expected to increase by 20.5% to 21%, reaching between $15.3 billion and $15.57 billion, which is below analysts' expectations of $15.7 billion [1] Valuation Metrics - The forward price-to-earnings ratio has decreased to 37.8, significantly lower than the five-year average of 67 [1] - The GAAP price-to-earnings ratio stands at 75, also below the five-year average of 252 [1] - The forward PEG ratio is 1.64, slightly lower than the sector median of 1.65 [1] Analyst Sentiment - Wall Street analysts maintain an optimistic outlook, with a consensus target price of $204, indicating a potential 57% increase from the current level [1] - Target prices from analysts include $200 from Cantor Fitzgerald and $175 from Jefferies, while only one analyst, Kash Rangan from Goldman Sachs, has downgraded the stock from buy to sell [1] Technical Analysis - The stock has been in a downward trend, falling from a high of $240 in January 2025 to $122 [1] - It has breached the 61.8% Fibonacci Retracement level at $133.45 and remains below key moving averages [1] - The Relative Strength Index (RSI) and MACD indicators show continued downward movement, suggesting further declines may target the next support level at $105 [1]