ServiceNow Plummets 4.16%: What's Fueling the Selloff?

Summary
• ServiceNow (NOW) tumbles 4.16% intraday to $874.38, a sharp reversal from its 52-week high of $1,198.09
• Goldman Sachs cuts stake by 131.4% in Q1, while CEO William McDermott offloads 2,050 shares
• RSI at 39.37 signals oversold territory, but Bollinger Bands show price remains below 200-day MA of $976.94

ServiceNow’s dramatic intraday plunge has sent shockwaves through the tech sector, with the stock trading nearly 4.16% below its opening price of $924.73. The selloff coincides with a broader tech sector downturn, as Salesforce (CRM) also declines 3.44%. Analysts are dissecting institutional selling pressure, bearish technical indicators, and recent earnings volatility to gauge whether this is a buying opportunity or a deeper correction.

Institutional Selling and Earnings Volatility Trigger Selloff
ServiceNow’s sharp decline stems from a confluence of factors: Goldman Sachs Group Inc. reduced its stake by 131.4% in Q1, now holding 0.72% of shares valued at $1.18 billion. CEO William McDermott’s recent sale of 2,050 shares at $1,012.01—marking a 23.66% reduction in his holdings—further signaled bearish sentiment. Meanwhile, the stock’s technical profile deteriorated, with RSI at 39.37 (oversold) and MACD (-18.62) below its signal line (-12.17), confirming a bearish crossover. The 52-week low of $678.66 looms as a critical psychological level.

Tech Sector Under Pressure as Salesforce Trails Behind
The broader tech sector mirrored ServiceNow’s weakness, with Salesforce (CRM) declining 3.44% as of 16:11 ET. Both stocks face similar headwinds: elevated P/E ratios (ServiceNow at 107.37x vs. Salesforce’s 113.93x) and a market-wide rotation toward value stocks. However, ServiceNow’s institutional ownership (87.18%) remains higher than Salesforce’s, amplifying its vulnerability to large-scale redemptions. The S&P 500’s 0.02% dip suggests macroeconomic concerns, including rising interest rates, are exacerbating the selloff.

Bearish Setup: ETFs and Options for Short-Term Volatility
• 200-day average: $976.94 (below current price)
• RSI: 39.37 (oversold)
• MACD: -18.62 (bearish crossover)
• Bollinger Bands: Lower bound at $903.93 (near current price)

The technical case for a short-term bearish bias is strong. Key support levels at $903.93 (lower Bollinger Band) and $874.38 (intraday low) could trigger further selling. The GraniteShares 2x Long NOW Daily ETF (NOWL), down 7.01%, offers leveraged exposure to a potential rebound but carries high risk given its 17,483.26% leverage ratio. For options, two contracts stand out:

• NOW20250912C880
- Type: Call
- Strike: $880
- Expiry: 2025-09-12
- IV: 0.34% (low volatility)
- Delta: 0.0149 (low sensitivity)
- Theta: -0.0153 (moderate time decay)
- Gamma: 0.0396 (moderate sensitivity to price moves)
- Turnover: 0
- Payoff at 5% downside: $0 (strike above current price)
- Why it stands out: Low IV and high gamma make this call option a speculative play if the stock stabilizes near $880.

• NOW20250926C880
- Type: Call
- Strike: $880
- Expiry: 2025-09-26
- IV: 0.11% (low volatility)
- Delta: 0.0352 (moderate sensitivity)
- Theta: -0.0257 (high time decay)
- Gamma: 0.2161 (high sensitivity to price moves)
- Turnover: 0
- Payoff at 5% downside: $0 (strike above current price)
- Why it stands out: Higher gamma and theta suggest this contract could benefit from a short-term rebound, though low IV limits upside potential.

Aggressive bulls may consider NOW20250926C880 into a bounce above $880.

Backtest ServiceNow Stock Performance
The performance of NOW after a -4% intraday plunge can be expected to show a recovery, given the following points:1. Market Reaction to News: The stock market, including NOW, reacts to news and events. If the -4% plunge was triggered by a specific news event, the market's reaction to any subsequent news could influence NOW's performance.2. Technical Analysis Indicators: NOW's technical indicators, such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), can provide insights into the stock's momentum and potential for a rebound. If the RSI indicates overselling, it could suggest a rebound is possible as traders adjust their positions.3. Sector Performance: The broader sector in which NOW operates can impact its performance. If the sector shows resilience after the plunge, it could indicate that NOW may also recover.4. Global Economic Trends: Global economic trends and events, such as changes in trade policies or geopolitical developments, can affect stock performance. If these factors stabilize or improve, they could contribute to NOW's recovery.In conclusion, while a -4% intraday plunge can be a significant event, the future performance of NOW will depend on a combination of market reactions, technical indicators, sector performance, and global economic trends.

Critical Levels to Watch as Sector Uncertainty Lingers
ServiceNow’s selloff reflects a mix of institutional redemptions, bearish technicals, and sector-wide pressure. While RSI suggests oversold conditions, the stock remains below its 200-day MA, indicating a bearish bias. Investors should monitor the $903.93 support level and Salesforce’s (-3.44%) trajectory as sector barometers. A breakdown below $874.38 could accelerate the decline toward the 52-week low. For now, short-term volatility favors options plays over leveraged ETFs like NOWL. Watch for $903.93 breakdown or Salesforce’s directional shift.