ServiceNow Plummets to 52-Week Low Amid AI Security Crisis: What’s Next for the SaaS Giant?

Summary
• ServiceNow (NOW) hits 52-week low of $134.06, down 2.83% intraday
• Critical 'BodySnatcher' AI vulnerability exposes systemic SaaS security flaws
• Options chain shows aggressive short-term positioning with 135-strike calls dominating turnover
• Sector leader Microsoft (MSFT) also declines 2.04%, signaling broader tech sector jitters

ServiceNow’s stock is in freefall as a severe AI-driven security flaw—dubbed BodySnatcher—shakes investor confidence. The vulnerability, which allows attackers to impersonate users and weaponize AI agents, has triggered a 2.83% drop to $134.28. With the stock trading near its 52-week low and the options market bracing for volatility, the SaaS giant faces a pivotal test of its security infrastructure and market resilience.

AI Security Flaw 'BodySnatcher' Sparks Investor Panic
ServiceNow’s collapse stems from a critical vulnerability in its AI-powered Virtual Agent API and Now Assist platform. The flaw, discovered by AppOmni’s Aaron Costello, allows unauthenticated attackers to impersonate users via a hardcoded secret and email-based auto-linking. This bypasses MFA and SSO protections, enabling malicious actors to execute AI agents that create admin accounts and grant full system access. The vulnerability, patched in October 2025, has now surfaced publicly, triggering fears of systemic misconfigurations in customer environments. The exploit highlights how agentic AI—once seen as a productivity tool—can become a security liability when guardrails are absent.

Application Software Sector Under Pressure as Microsoft Slides
The Application Software sector is broadly underperforming, with Microsoft (MSFT) down 2.04% despite its dominance in cloud infrastructure. While ServiceNow’s decline is tied to a product-specific crisis, the sector’s weakness reflects broader concerns about AI security and regulatory scrutiny. Microsoft’s Azure and Office 365 platforms, though not directly impacted, face indirect pressure as investors reassess AI-driven SaaS risks. The sector’s 30-day price trend (-2.04% for MSFT) suggests a fragile environment for high-growth tech stocks.

Bearish Setup: ETFs and Options for Short-Term Volatility
• 200-day average: $851.77 (far above current price)
• RSI: 20.23 (oversold territory)
• MACD: -148.52 (bearish divergence)
• Bollinger Bands: Price near lower band ($134.06)
• GraniteShares 2x Long NOW Daily ETF (NOWL): -6.02% (aggressive leveraged play)

The technicals paint a bearish near-term picture. RSI at 20.23 signals oversold conditions, while the MACD histogram (-148.52 vs. signal line -162.74) suggests momentum is stabilizing. The 200-day average ($851.77) remains a distant resistance, but the stock’s proximity to its 52-week low ($134.06) raises short-term support concerns. The GraniteShares 2x Long NOW Daily ETF (NOWL) has amplified the decline (-6.02%), reflecting leveraged bearish sentiment.

Top Options Picks:
• NOW20260123C135
- Type: Call
- Strike: $135
- Expiry: 2026-01-23
- IV: 33.02% (moderate)
- Leverage: 50.66%
- Delta: 0.479 (moderate sensitivity)
- Theta: -0.404 (high time decay)
- Gamma: 0.054 (strong price sensitivity)
- Turnover: 87,249 (high liquidity)
- Why it stands out: This call offers a balance of leverage and liquidity. With a delta of 0.479, it’s positioned to benefit from a rebound above $135. The high gamma (0.054) ensures responsiveness to price swings, while the 33.02% IV suggests reasonable implied volatility. A 5% downside scenario (to $127.57) would result in zero payoff, but the option’s high turnover ensures easy entry/exit.

• NOW20260123C138
- Type: Call
- Strike: $138
- Expiry: 2026-01-23
- IV: 31.60% (moderate)
- Leverage: 95.90%
- Delta: 0.317 (moderate sensitivity)
- Theta: -0.297 (high time decay)
- Gamma: 0.051 (strong price sensitivity)
- Turnover: 21,121 (high liquidity)
- Why it stands out: The 138-strike call offers aggressive leverage (95.90%) with a delta of 0.317, making it ideal for a rebound scenario. The 31.60% IV is reasonable, and the high gamma (0.051) ensures it reacts sharply to price movements. However, a 5% downside would leave it out of the money, so it’s best suited for a near-term bounce above $138.

Action Insight: Aggressive bulls should consider NOW20260123C135 into a break above $135. Cautious traders may short the 138-strike call if the stock fails to hold $134.06.

Backtest ServiceNow Stock Performance
The performance of ServiceNow (NOW) after a -3% intraday plunge from 2022 to now has shown a positive rebound. The backtest reveals an average cumulative return of +5.4% within 30 days following the plunge. This indicates a tendency for the stock to recover and even exceed its previous closing value in the short term.

ServiceNow at Crossroads: Security Crisis or Buying Opportunity?
ServiceNow’s collapse to a 52-week low underscores the urgency of its AI security crisis, but the technicals suggest a potential rebound. The RSI at 20.23 and Bollinger Bands near the lower bound indicate oversold conditions, while the options market shows heavy positioning around the $135 strike. Investors must weigh the severity of the BodySnatcher flaw against the stock’s long-term fundamentals. Microsoft’s 2.04% decline as a sector leader adds context, but ServiceNow’s unique vulnerability remains the key driver. Watch for a $134.06 support hold and the 135-strike call’s performance—break above $135 could signal a short-covering rally.