Is ServiceNow a Good Investment?
ServiceNow Incorporation is a company based in the United States. The company designs and distributes software services for customers around the world. The company offers service management software that is used by companies of all sizes in order to monitor digital workflows and other aspects of the company. The company was founded in 2004.
Why You Should?
- The COVID-19 pandemic has boosted the demand for the products and services offered by ServiceNow. This is because as companies shift to a work-from-home environment, they needed service management in order to control digital workflows. This pandemic growth has benefited the company and has also benefited its investors.
- ServiceNow is a great growth play in an investor’s portfolio. As companies continue to look for more efficient methods in order to control their operations, ServiceNow will see a rise in demand for some of the software products that they offer. This makes ServiceNow a great long-term investment. This has benefited the company’s investors in the past and might continue to hurt investors in the future.
- ServiceNow might be looking to make an acquisition of a relevant enterprise software provider in order to boost its growth and product offerings to its customers. If the company makes a solid acquisition, it will jumpstart its growth for the future. This will also benefit investors in the future.
- ServiceNow has seen rising revenues and profits over the past couple of financial years, though profits have been a bit more lackluster. This revenue growth has show investors that the products the company designs and sells are popular with customers. This will help the company’s future growth and will also benefit investors in the company. In the financial year of 2020, the company reported revenues of around 4.52 billion, a metric that is higher than what the company reported in the financial year of 2019 when they had revenues of around 3.46 billion.
Why You Should Not?
- ServiceNow has to deal with tough competition within the software industry. Some of these competitors include SolarWinds, IBM, Microsoft, and many others. This competition might hurt the company and its investors in the future.
- ServiceNow is an extremely expensive stock. It currently trades at around 600 dollars with a price to earnings ratio of over 1000 (this is extremely high). This makes ServiceNow an extremely volatile investment option in the short to mid-term even though it might trend up in the future. This might hurt the company and its investors in the future.
I think that ServiceNow is a decent long-term investment due to the impacts from the COVID-19 pandemic, its position in a growing industry, possible growth opportunities, and rising revenues. However, an expensive stock price and tough competition might hurt the company and its investors in the future.