ServiceNow Takes $2.3B Market Cap Hit After CEO Announces Exit

Since last Friday, the company’s market cap has fallen by $7.16 billion, as some analysts have expressed growing concern about the company’s value, with Mizuho Financial Group cutting NOW’s rating from ‘buy’ to ‘neutral.’

Once the sure-fire winner in any tech portfolio, ServiceNow has lost $2.3 billion in value since the firm announced yesterday that CEO John Donahoe would step down by the end of the year to run Nike.

The company’s share price fell more than 5 percent since the after-the-bell announcement Tuesday to $216.11 today. But the leadership transition may not be the only matter at work.

Since last Friday, the company’s market cap has fallen by $7.16 billion, as some analysts have expressed growing concern about the company’s value, with Mizuho Financial Group cutting NOW’s rating from “buy” to “neutral.”

Yet despite the anxiety on Wall Street, the company has continued to show growth. ServiceNow is expected to release third quarter earnings after the bell today that show 32-percent growth year over year in total revenue.

Also during the call, analysts will hear from outgoing CEO Donahoe and incoming CEO Bill McDermott. Two weeks ago, McDermott left SAP after a 17 year career there.

McDermott, who served as CEO of SAP from 2014, will join ServiceNow by year-end 2019 as president and CEO and a member of the board of directors, ServiceNow said in a statement.

Donahoe has been in the job since April 2017, from which he has overseen revenue growth of greater than 30 percent each quarter. The stock price though has lost value, dropping from $302.31 in July to $215.96 as of Wednesday afternoon.