ServiceNow Heads for Its Steepest Drop on Record, but JPMorgan Sees a Silver Lining

Shares of ServiceNow were heading for their biggest drop on record on Thursday, falling nearly 18% in premarket trading as investors digested the software company's third-quarter earnings.

The sell-off was sharp enough to reset expectations for a stock that has been closely watched as a bellwether for enterprise software. A move of that size shows the market was not willing to overlook whatever disappointed in the quarter, even as the company kept its core business running.

Not every analyst is reading the report as a warning. JPMorgan has highlighted a bright spot in the results, a sign that some of the underlying business may be holding up better than the initial reaction suggests. Whether that view gains traction will depend on how the company frames its outlook and whether the rest of the software sector follows ServiceNow lower.

For now, the focus is on the gap between the immediate selloff and the more measured take from Wall Street's research desks. Investors will be looking for signs of whether the drop reflects a lasting change in the company's growth or a short-term overreaction to a single report.