Investors buying into an IPO usually regret it very soon. That’s because initial public offerings are often deliberately overpriced so that the company can raise as much money as possible. Early ServiceNow investors, however, were among the few lucky ones. The stock opened at $5 a share in June, 2012, and started rising right away. A year ago, in January, 2025, it reached an all-time high of $240.
The past twelve months tell a different story, though, and it isn’t one the bulls would brag about. ServiceNow’s valuation has been cut nearly in half. The stock fell below $124 this month, despite the company’s consistently high revenue growth, big net cash position and incredibly high margins. Management expects revenue to grow by another 20% in 2026.
Usually, when a company is doing this well, while the market keeps punishing it anyway, there is a good chance that its stock is worth picking up. Is that the case when it comes to ServiceNow? It might be, according to Elliott Wave analysis.
This weekly logarithmic chart reveals that the stock’s ascent over the past 14 years has produced a very clear five-wave impulse. We’ve labeled the pattern (1)-(2)-(3)-(4)-(5), where the five sub-waves of (1) and (3) are also visible. Even the impulsive structure of wave 1 of (3) can be easily marked as i-ii-iii-iv-v. According to the theory, a three-wave correction follows every impulse and that’s what the 2025 decline stands for.
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It can be seen as a simple (a)-(b)-(c) zigzag retracement, whose wave (c) is still in progress. If ServiceNow’s growth and fundamentals remain this solid, there is probably not much left of it. Where exactly the bottom is going to form is impossible to tell, but long-term investors should view any drop near the $100 mark as a gift. As Peter Lynch likes to say, the stock still holds multi-bagger potential, especially once wave III gets underway.
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