ServiceNow Stock Price Plummets on Acquisition Rumors and Analyst Downgrade

ServiceNow shares crashed on Monday. The stock suffered its worst single-day drop in nearly a year. The sell-off was triggered by two major headlines over the weekend.

Reports surfaced that ServiceNow is in advanced talks for a massive cybersecurity acquisition. Simultaneously, a prominent Wall Street analyst downgraded the stock. Investors reacted by sending shares down sharply.

The $7 Billion Armis Deal That Spooked Investors

According to Bloomberg, ServiceNow is nearing a deal to buy cybersecurity firm Armis. The price tag could reach an estimated $7 billion. This would be ServiceNow’s largest acquisition ever.

Armis specializes in securing connected devices and Internet of Things (IoT) networks. The Israeli-founded company was recently valued at $6.1 billion. A $7 billion deal represents a significant premium.

The market viewed the potential purchase as a major strategic shift. It signals a huge commitment to the competitive cybersecurity sector. This follows ServiceNow’s $1 billion deal for Veza just weeks earlier.

KeyBanc Analyst Cites AI Risks in Surprise Downgrade

Adding fuel to the fire, KeyBanc Capital Markets analyst Jackson Ader downgraded ServiceNow. He moved the stock from Sector Weight to Underweight. Ader set a price target of $775.

His report highlighted concerns about artificial intelligence. He questioned if AI advancements pose a risk to traditional SaaS business models. The downgrade applied broader pressure to the software sector.

The timing of this analyst note worsened the market’s reaction. It gave a credible, bearish viewpoint that aligned with investor fears. The combination created a perfect storm of negative sentiment.

Broader Market Impact and Stock Performance

ServiceNow stock fell 11.5% to close at $765.20. This was its steepest decline since late January of this year. The drop erased billions in market value.

The stock is now down about 27% since the start of 2025. It also trades roughly 34% below its 52-week high. This indicates a sustained period of pressure on the share price.

Other enterprise software stocks felt some ripple effects. The news prompted investors to re-evaluate valuations across the sector. High-growth tech names are particularly sensitive to shifts in capital allocation strategy.

The ServiceNow stock price collapse reflects deep investor anxiety over costly acquisitions and disruptive AI threats. The coming days will be critical as the company may formally announce its strategic plans.

Info at your fingertips

What is ServiceNow reportedly buying for $7 billion?

ServiceNow is in advanced talks to acquire the cybersecurity startup Armis. The deal focuses on device security technology. It would mark a huge expansion into the cybersecurity market for ServiceNow.

Why did KeyBanc downgrade ServiceNow stock?

Analyst Jackson Ader downgraded the stock due to concerns about artificial intelligence. He believes AI could disrupt traditional software business models. This led to an Underweight rating and a $775 price target.

How much did ServiceNow stock drop?

The stock plummeted 11.5% in a single trading session. This was its worst daily performance in 11 months. The drop followed the dual news of the acquisition rumor and the analyst downgrade.

What does the Armis acquisition mean for ServiceNow?

The deal signals a major push into the cybersecurity industry. It follows the recent purchase of identity security firm Veza. Together, these moves show ServiceNow is betting heavily on security as a growth area.

Is the Armis deal confirmed?

No, the deal has not been officially confirmed by ServiceNow. Reports from Bloomberg state talks are advanced but could still fall apart. An announcement could come in the near future.

How does this affect ServiceNow investors?

Investors are concerned about the high cost of the acquisition and integration risks. The stock downgrade adds to the negative outlook. Shareholders are awaiting clear communication from management on the strategy.