ServiceNow stock just plunged more than 20% in a single day. Here’s what he did after his other biggest drops.

ServiceNow (NOW -26.95%) the stock is down sharply on Thursday. As of this writing, shares of the workflow software company stand at nearly $112, down about 25% from Wednesday’s close of $150.13.

This puts the stock on track for its worst day since its IPO in 2012. Its biggest one-day decline before today was around 18%, on April 23, 2026.

The sale follows the company’s third-quarter results after Wednesday’s close. And the quarter itself was good. Subscription revenue increased 21% year over year to $3.99 billion (20.5% in constant currency), beating the high end of management’s forecast.

The problem was prospects. ServiceNow expects fourth-quarter growth of just 18.5% in current outstanding performance obligations (cRPOs) – already contracted revenue that it expects to recognize within a year.

I think the slowdown is worth taking seriously. But the stock has come back from most of its previous worst days.

Image source: The Motley Fool.

Most big declines didn’t last

Using daily closing prices (adjusted for stock splits), ServiceNow stock had lost more than 10% in a single session 10 days before today.

In seven of those ten cases, the stock was up six months later. And it was higher a year later after six of the eight declines with a full year of history behind them.

The median gain was about 15% after six months and about 40% after 12 months.

After the April 23 decline, the stock closed at $84.78. Six months later, on October 23, they closed at $158.96, an increase of about 88%.

After losing about 16% on January 28, 2016, the stock rose about 20% over the next six months and about 42% over the next year.

The drop of around 13% on July 12, 2022 took longer to resolve. Shares were down about 3% six months later, but up about 31% after a year.

It should be noted that April’s liquidation has many similarities with today’s. Management had forecast CRPO growth of 19.5% on a constant currency basis in the second quarter and said delays in closing several large on-premise deals in the Middle East hurt first-quarter subscription revenue. CRPO growth in the second quarter then stood at 21.5% at constant exchange rates.

2025 exceptions

But the results are not perfect. ServiceNow stock lost around 11% on January 30, 2025, just two days after its record close of around $234. A year later, shares were down about 42%.

The stock also fell about 12% on December 15, 2025. Over the next six months, it lost about another 32%.

Therefore, a sharp drop over one day is not in itself a reliable buying signal. Sometimes it was the start of a longer slide.

Is the cRPO slowdown due to timing?

Management says much of the fourth-quarter slowdown is due to timing and how cRPOs are accounted for. Chief Financial Officer Gina Mastantuono told analysts on Wednesday’s call that some contracts were renewed early.

“As it relates to cRPO, we saw strong early renewals in Q3, which contributed about half the pace in Q3. This is now having a negative impact in Q4, as we pulled those deals out of Q4 into Q3,” she said.

She added that more on-premises transactions from public sector customers would cost about a quarter of a percentage point to CRPO growth in the fourth quarter, but those transactions would still be factored into revenue. And management expects fourth-quarter subscription revenue to grow 21.5% in constant currencies, a bit faster than the third-quarter rate.

Yet cRPO growth has slowed all year. Reported CRPO growth increased by 22.5%, 21% and 20.5% during the first three quarters of 2026. A fall to 18.5% would be the largest decline during this period. And if artificial intelligence (AI) agents are encroaching on what customers pay to ServiceNow, that’s probably where it could show up first.

It’s true that ServiceNow has a history of exceeding its own cRPO guidelines. In constant currency, it exceeded its second quarter guide by 2 percentage points and its third quarter guide by 1 point. But early renewals have already moved part of the fourth quarter into the third, so I wouldn’t count on a big beat this time around.

The sell-off has, at least, left the stock much cheaper. ServiceNow now costs about 23 times expected 2027 earnings. The day before, it cost about 30 times 2027 earnings.

Overall, ServiceNow’s bottom line after its worst days leans towards patience, and this decline is accompanied by a rise in subscription revenue of around 20%. But the 2025 declines remind us that falling prices do not guarantee a rebound. For this one to look more like April than 2025, I think Q4 cRPO growth needs to match or exceed the guide of 18.5%.