What Happened:
Shares of enterprise workflow software maker ServiceNow (NYSE:NOW) jumped 5.23% in the afternoon session after the company announced its first-ever share buyback program during its investor day. The program enabled the purchase of up to $1.5 billion in shares of common stock. Management added that "given the current macro environment and our strong cash flow generation, we believe that using a portion of our free cash flow to manage dilution is a strategic use of capital. This program reflects our conviction in the trajectory of our business and our commitment to driving exceptional shareholder value."
What is the market telling us:
ServiceNow's shares are quite volatile and over the last year have had 18 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 22 days ago, when the company dropped 5.04% as markets positioned ahead of key earnings. There is much uncertainty currently, which the market dislikes. In addition to positioning ahead of earnings, a negative for stocks was First Republic Bank, which posted disappointing Q1 earnings, as it saw net deposit withdrawals of more than $70B in the quarter. This was more than expected. It also disclosed plans to slash its workforce by 20%-25%. This raises new concerns that banks are less healthy than feared and will cause widespread economic slowdown as the sector pulls back on lending, which could negatively impact all sectors from tech to consumer to industrials alike.
ServiceNow is up 27.6% since the beginning of the year, and at $491.82 per share it is trading close to its 52-week high of $516.20 from August 2022. Investors who bought $1,000 worth of ServiceNow's shares 5 years ago would now be looking at an investment worth $2,860.
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