ServiceNow Inc. Stock: The 100% Gain in 5 Years

Introduction

ServiceNow Inc. (NYSE: NOW) is a leading provider of cloud-based IT service management (ITSM) and other enterprise software solutions. The company's stock has been one of the best performers in the software industry over the past five years, delivering a total return of over 100%.

Financial Performance

ServiceNow's financial performance has been strong in recent years. The company's revenue has grown from $1.2 billion in 2015 to $4.5 billion in 2019, a compound annual growth rate (CAGR) of 32%. Non-GAAP earnings per share (EPS) have grown from $0.46 in 2015 to $2.46 in 2019, a CAGR of 38%.

Growth Drivers

The growth of ServiceNow's business has been driven by a number of factors, including:

• The increasing adoption of cloud-based software. More and more businesses are moving their IT systems to the cloud, and ServiceNow is a leading provider of cloud-based ITSM solutions.
• The growing demand for enterprise software. Businesses of all sizes are increasingly relying on software to manage their operations, and ServiceNow offers a comprehensive suite of enterprise software solutions.
• The company's strong sales and marketing execution. ServiceNow has a strong sales and marketing team that has been successful in generating leads and converting them into customers.

Valuation

ServiceNow's stock is currently trading at around $350 per share, which gives the company a market capitalization of around $60 billion. This valuation is roughly 10x the company's forward sales and 30x its forward earnings.

While ServiceNow's valuation is relatively high, it is justified by the company's strong growth prospects and its position as a leader in the cloud-based ITSM market.

Risks

There are a number of risks that could impact ServiceNow's stock price, including:

• Competition. ServiceNow faces competition from a number of other vendors, including BMC Software, IBM, and Microsoft.
• The company's dependence on a small number of customers. ServiceNow's business is concentrated among a small number of large customers, and the loss of any of these customers could have a material impact on the company's financial performance.
• The impact of the COVID-19 pandemic. The COVID-19 pandemic could have a negative impact on ServiceNow's business, as businesses may reduce their spending on software and services.

Investment Thesis

ServiceNow is a well-positioned company with a strong growth trajectory. The company is a leader in the cloud-based ITSM market and has a strong sales and marketing team. While the company's valuation is relatively high, it is justified by its strong growth prospects.

Investors who are looking for a long-term growth stock should consider investing in ServiceNow.

Tables

The following tables provide additional information on ServiceNow's financial performance and valuation.

Effective Strategies

Here are some effective strategies for investing in ServiceNow stock:

• Invest for the long term. ServiceNow is a long-term growth stock, and investors should be prepared to hold the stock for several years in order to see the full benefits of their investment.
• Dollar-cost average into your investment. Dollar-cost averaging is a strategy of investing a fixed amount of money in a stock at regular intervals. This strategy can help to reduce the risk of investing at a high price.
• Rebalance your portfolio regularly. As your investment portfolio grows, you should rebalance it regularly to ensure that your asset allocation is still in line with your risk tolerance and investment goals.

Step-by-Step Approach

Here is a step-by-step approach to investing in ServiceNow stock:

1. Do your research. Before you invest in any stock, it is important to do your research and understand the company's business, financial performance, and valuation.
2. Decide how much you want to invest. Once you have done your research, you need to decide how much you want to invest in ServiceNow stock.
3. Choose a brokerage account. You will need to choose a brokerage account in order to buy and sell ServiceNow stock.
4. Place your order. Once you have chosen a brokerage account, you can place your order to buy ServiceNow stock.
5. Monitor your investment. Once you have purchased ServiceNow stock, you should monitor your investment regularly to track its performance and make any necessary adjustments.

Why Matters

Investing in ServiceNow stock matters because it gives you the opportunity to participate in the growth of a leading provider of cloud-based ITSM and other enterprise software solutions. ServiceNow is a well-positioned company with a strong growth trajectory, and its stock is a good long-term investment for investors who are looking for growth.

Benefits

There are a number of benefits to investing in ServiceNow stock, including:

• The potential for long-term growth. ServiceNow is a well-positioned company with a strong growth trajectory. Investors who invest in ServiceNow stock have the potential to see substantial returns over the long term.
• The opportunity to participate in the growth of the cloud computing market. ServiceNow is a leading provider of cloud-based ITSM solutions. Investors who invest in ServiceNow stock are betting on the continued growth of the cloud computing market.
• The potential for dividends. ServiceNow has not yet started paying dividends, but it is likely to start paying dividends in the future as it matures. Dividends provide investors with a stream of income and can help to offset the risk of investing in stocks.

Conclusion

ServiceNow is a well-positioned company with a strong growth trajectory. The company is a leader in the cloud-based ITSM market and has a strong sales and marketing team. While the company's valuation is relatively high, it is justified by its strong growth prospects.

Investors who are looking for a long-term growth stock should consider investing in ServiceNow.