ServiceNow in Deep Waters as CEO Confirms Tech Firm Not Able to Compete with Strong Dollar
Key points ServiceNow stocks:
- It appears that macro headwinds along with the strong dollar are proving to be the kryptonite for tech companies worldwide according to Service Now CEO Bill McDermott.
- According to McDermott, it is highly unlikely that tech companies will outpace the dollar at the moment.
- Since his comments, ServiceNow shares plummeted by 12%.
According to ServiceNow CEO Bill McDermott, the avalanche caused by macro headwinds and the strong dollar is too strong a force for global tech companies. McDermott made these remarks in an interview with CNBC’s Jim Cramer.
He said that we are witnessing 41-year high inflation and the dollar is at its highest point in more than 20 years. He also added that due to the surging interest rates and the ongoing war in Ukraine, market conditions are not very ripe for tech players. The interview aired on “Mad Money” post the closing bell on Monday.
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ServiceNow turmoil
ServiceNow enables companies to digitize their workflow. Recently, the company has widened its core business offerings by adding human resources and customer service management.
However, the company’s shares have fallen by 12% after McDermott’s comments. McDermott’s views are based on general industry observations and not specific to ServiceNow. ServiceNow has treaded through a quiet period ahead of reporting its earnings from the last quarter on July 27.
High inflation rates, shutdowns in China due to the pandemic, and the geopolitical situation in Europe have put a severe dent in tech stocks. A bunch of tech-heavyweights are expected to reveal their earnings in the last quarter next month, setting the tone for the overall industry.
Despite odds racking up against the tech world, McDermott says that the tech companies will play a key role in aiding the U.S. economy and getting it through the topsy-turvy market environment. He says that if you consider energy, the dislocation due to the war in Europe had led to longer cycles. However, this does not change the fact that tech will remain instrumental in getting past these headwinds.
McDermott is referring to reprioritization wherein a surge in demand for fast-return-on investment is on the cards.
Time will tell if the tech industry can successfully navigate through these hostile conditions and gain a strong foothold again. Meanwhile, let us know what is your take on the dwindling ServiceNow stock prices? Will the company’s stocks see daylight again?
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