2 Reasons to Buy ServiceNow Stock in 2023
2022 was a brutal year for tech investors, and ServiceNow (NYSE: NOW) stock didn't escape the carnage. While the company has recovered somewhat in 2023, it is still down roughly 22% over the last 12 months, making now a great time to consider buying the dip. Let's discuss two compelling reasons why it could be a long-term winner.
Starting in 2022, the U.S. Federal Reserve began raising its benchmark interest rates at the fastest pace in history to control inflation in the wake of the coronavirus crisis. Higher rates can hurt growth stocks because they lower the future value of their cash flows and change investors' risk/reward calculations. Furthermore, higher rates can make it more expensive for companies to raise capital needed to fund their operations.
But ServiceNow also faces industry-specific challenges. Its core business involves selling subscriptions for enterprise-level cloud platforms designed to help companies manage and automate processes, including IT, HR, and customer service. Demand might be somewhat cyclical because it depends on how confident these clients are in the economy. When the future is uncertain, businesses will be less likely to migrate their workflows to ServiceNow's platform, while existing clients will be more likely to switch to lower-priced service tiers to save cash.
Source Fool.com
