Photo credit: www.investopedia.com

ServiceNow Sees Significant Stock Increase Following Strong Earnings Report

ServiceNow (NOW) experienced a notable uptick in its stock price, surging more than 10% in after-hours trading on Wednesday. This boost comes in the wake of an announcement revealing that the company had surpassed quarterly performance expectations, coupled with a positive outlook on subscription revenue that has pleased investors and analysts alike.

Prior to this increase, ServiceNow shares had suffered a decline of nearly 25% since the beginning of the year, largely attributed to apprehensions regarding potential revenue impacts from the Trump administration’s efforts to limit government spending.

Compounding these concerns were uncertainties surrounding tariffs, which have put businesses on edge. However, the company’s Chief Financial Officer, Gina Mastantuono, expressed strong confidence in ServiceNow’s capacity to adapt to these shifting economic circumstances. According to a report from Barron’s, she noted that indications of demand from corporate leaders remain robust.

As ServiceNow shares approached about $898 in after-hours trading, attention turned to the technical aspects of the stock’s performance. A deeper analysis of ServiceNow’s price chart reveals significant levels to monitor following the earnings report.

Technical Analysis: A Breakout from the Descending Channel

For several months, ServiceNow shares had been navigating a downward trend within a descending channel, particularly after establishing a double top pattern in late January. Wednesday’s breakout above this trendline signals the potential for a reversal in this pattern, suggesting a shift toward a bullish correction.

The relative strength index (RSI) indicates positive momentum for ServiceNow, remaining below overbought levels, which offers ample opportunity for the stock to continue its ascent.

Key Resistance Levels to Monitor

Investors should keep an eye on crucial resistance levels, starting at approximately $900. This price point could serve as a barrier, as it aligns with a trendline that has been prevalent in the stock’s movements since last September.

Should ServiceNow maintain a close above this threshold, it could set off a significant rally towards the psychological resistance of $1,000. This mark is notable as many investors who acquired shares at earlier, lower prices might consider taking profits near this region, especially since it correlates with the mid-February peak and a minor retracement that occurred last November.

If the momentum persists, shares could potentially rise toward $1,160, a level characterized by the peaks observed in December and January, corresponding to the earlier double top formation.

Key Support Level for Pullbacks

In the event of a downturn following strong earnings momentum, investors may see a declining share price return to around $807. This level is significant as it represents a potential entry point, coinciding with the breakout region and various peaks and troughs on the chart going back to July of the previous year.

As ServiceNow continues to navigate these important technical milestones, its ability to break through resistance levels could signal a bullish trend, while maintaining support levels will be critical for investor confidence moving forward.

Source
www.investopedia.com