ServiceNow Inc. (NYSE:NOW)

Capital Asset Pricing Model (CAPM)

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like ServiceNow Inc. common stock.

Rates of Return
Variance and Covariance
Systematic Risk (β) Estimation
Expected Rate of Return

Rates of Return

ServiceNow Inc., monthly rates of return

		ServiceNow Inc. (NOW)			Standard & Poor’s 500 (S&P 500)
t	Date	Price_NOW,t¹	Dividend_NOW,t¹	R_NOW,t²	Price_{S&P 500,t}	R_{S&P 500,t}³
	Jan 31, 2021	$108.63			3,714.24
1.	Feb 28, 2021	$106.69		-1.79%	3,811.15	2.61%
2.	Mar 31, 2021	$100.02		-6.25%	3,972.89	4.24%
3.	Apr 30, 2021	$101.27		1.25%	4,181.17	5.24%
.	.	.	.	.	.	.
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58.	Nov 30, 2025	$162.48		-11.63%	6,849.09	0.13%
59.	Dec 31, 2025	$153.19		-5.72%	6,845.50	-0.05%
Average (R):				0.93%		1.14%
Standard deviation:				8.56%		4.37%

		ServiceNow Inc. (NOW)			Standard & Poor’s 500 (S&P 500)
t	Date	Price_NOW,t¹	Dividend_NOW,t¹	R_NOW,t²	Price_{S&P 500,t}	R_{S&P 500,t}³
	Jan 31, 2021	$108.63			3,714.24
1.	Feb 28, 2021	$106.69		-1.79%	3,811.15	2.61%
2.	Mar 31, 2021	$100.02		-6.25%	3,972.89	4.24%
3.	Apr 30, 2021	$101.27		1.25%	4,181.17	5.24%
4.	May 31, 2021	$94.78		-6.41%	4,204.11	0.55%
5.	Jun 30, 2021	$109.91		15.96%	4,297.50	2.22%
6.	Jul 31, 2021	$117.58		6.98%	4,395.26	2.27%
7.	Aug 31, 2021	$128.73		9.48%	4,522.68	2.90%
8.	Sep 30, 2021	$124.45		-3.32%	4,307.54	-4.76%
9.	Oct 31, 2021	$139.55		12.13%	4,605.38	6.91%
10.	Nov 30, 2021	$129.54		-7.17%	4,567.00	-0.83%
11.	Dec 31, 2021	$129.82		0.22%	4,766.18	4.36%
12.	Jan 31, 2022	$117.16		-9.75%	4,515.55	-5.26%
13.	Feb 28, 2022	$115.98		-1.01%	4,373.94	-3.14%
14.	Mar 31, 2022	$111.38		-3.97%	4,530.41	3.58%
15.	Apr 30, 2022	$95.62		-14.15%	4,131.93	-8.80%
16.	May 31, 2022	$93.49		-2.23%	4,132.15	0.01%
17.	Jun 30, 2022	$95.10		1.72%	3,785.38	-8.39%
18.	Jul 31, 2022	$89.33		-6.07%	4,130.29	9.11%
19.	Aug 31, 2022	$86.92		-2.70%	3,955.00	-4.24%
20.	Sep 30, 2022	$75.52		-13.12%	3,585.62	-9.34%
21.	Oct 31, 2022	$84.15		11.43%	3,871.98	7.99%
22.	Nov 30, 2022	$83.26		-1.06%	4,080.11	5.38%
23.	Dec 31, 2022	$77.65		-6.74%	3,839.50	-5.90%
24.	Jan 31, 2023	$91.03		17.23%	4,076.60	6.18%
25.	Feb 28, 2023	$86.43		-5.05%	3,970.15	-2.61%
26.	Mar 31, 2023	$92.94		7.53%	4,109.31	3.51%
27.	Apr 30, 2023	$91.88		-1.14%	4,169.48	1.46%
28.	May 31, 2023	$108.96		18.59%	4,179.83	0.25%
29.	Jun 30, 2023	$112.39		3.15%	4,376.86	4.71%
30.	Jul 31, 2023	$116.60		3.75%	4,588.96	4.85%
31.	Aug 31, 2023	$117.77		1.00%	4,507.66	-1.77%
32.	Sep 30, 2023	$111.79		-5.08%	4,288.05	-4.87%
33.	Oct 31, 2023	$116.37		4.10%	4,193.80	-2.20%
34.	Nov 30, 2023	$137.15		17.86%	4,567.80	8.92%
35.	Dec 31, 2023	$141.30		3.03%	4,769.83	4.42%
36.	Jan 31, 2024	$153.08		8.34%	4,845.65	1.59%
37.	Feb 29, 2024	$154.27		0.78%	5,096.27	5.17%
38.	Mar 31, 2024	$152.48		-1.16%	5,254.35	3.10%
39.	Apr 30, 2024	$138.67		-9.06%	5,035.69	-4.16%
40.	May 31, 2024	$131.39		-5.25%	5,277.51	4.80%
41.	Jun 30, 2024	$157.33		19.74%	5,460.48	3.47%
42.	Jul 31, 2024	$162.88		3.53%	5,522.30	1.13%
43.	Aug 31, 2024	$171.00		4.99%	5,648.40	2.28%
44.	Sep 30, 2024	$178.88		4.61%	5,762.48	2.02%
45.	Oct 31, 2024	$186.60		4.32%	5,705.45	-0.99%
46.	Nov 30, 2024	$209.89		12.48%	6,032.38	5.73%
47.	Dec 31, 2024	$212.02		1.01%	5,881.63	-2.50%
48.	Jan 31, 2025	$203.68		-3.93%	6,040.53	2.70%
49.	Feb 28, 2025	$185.95		-8.70%	5,954.50	-1.42%
50.	Mar 31, 2025	$159.23		-14.37%	5,611.85	-5.75%
51.	Apr 30, 2025	$191.00		19.95%	5,569.06	-0.76%
52.	May 31, 2025	$202.22		5.87%	5,911.69	6.15%
53.	Jun 30, 2025	$205.62		1.68%	6,204.95	4.96%
54.	Jul 31, 2025	$188.62		-8.27%	6,339.39	2.17%
55.	Aug 31, 2025	$183.49		-2.72%	6,460.26	1.91%
56.	Sep 30, 2025	$184.06		0.31%	6,688.46	3.53%
57.	Oct 31, 2025	$183.86		-0.11%	6,840.20	2.27%
58.	Nov 30, 2025	$162.48		-11.63%	6,849.09	0.13%
59.	Dec 31, 2025	$153.19		-5.72%	6,845.50	-0.05%
Average (R):				0.93%		1.14%
Standard deviation:				8.56%		4.37%

Show all

¹ Data in US$ per share of common stock, adjusted for splits and stock dividends.

² Rate of return on common stock of NOW during period t

³ Rate of return on S&P 500 (the market portfolio proxy) during period t

Variance and Covariance

ServiceNow Inc., calculation of variance and covariance of returns

t	Date	R_NOW,t	R_{S&P 500,t}	(R_NOW,t–R_NOW)²	(R_{S&P 500,t}–R_{S&P 500})²	(R_NOW,t–R_NOW)×(R_{S&P 500,t}–R_{S&P 500})
1.	Feb 28, 2021	-1.79%	2.61%	7.40	2.17	-4.01
2.	Mar 31, 2021	-6.25%	4.24%	51.63	9.66	-22.33
3.	Apr 30, 2021	1.25%	5.24%	0.10	16.86	1.30
.	.	.	.	.	.	.
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58.	Nov 30, 2025	-11.63%	0.13%	157.81	1.01	12.64
59.	Dec 31, 2025	-5.72%	-0.05%	44.24	1.41	7.91
Total (Σ):				4,253.18	1,108.23	1,091.71

t	Date	R_NOW,t	R_{S&P 500,t}	(R_NOW,t–R_NOW)²	(R_{S&P 500,t}–R_{S&P 500})²	(R_NOW,t–R_NOW)×(R_{S&P 500,t}–R_{S&P 500})
1.	Feb 28, 2021	-1.79%	2.61%	7.40	2.17	-4.01
2.	Mar 31, 2021	-6.25%	4.24%	51.63	9.66	-22.33
3.	Apr 30, 2021	1.25%	5.24%	0.10	16.86	1.30
4.	May 31, 2021	-6.41%	0.55%	53.91	0.35	4.31
5.	Jun 30, 2021	15.96%	2.22%	225.88	1.18	16.31
6.	Jul 31, 2021	6.98%	2.27%	36.54	1.30	6.88
7.	Aug 31, 2021	9.48%	2.90%	73.09	3.11	15.07
8.	Sep 30, 2021	-3.32%	-4.76%	18.14	34.73	25.10
9.	Oct 31, 2021	12.13%	6.91%	125.43	33.39	64.71
10.	Nov 30, 2021	-7.17%	-0.83%	65.72	3.88	15.97
11.	Dec 31, 2021	0.22%	4.36%	0.52	10.40	-2.31
12.	Jan 31, 2022	-9.75%	-5.26%	114.19	40.89	68.33
13.	Feb 28, 2022	-1.01%	-3.14%	3.77	18.25	8.29
14.	Mar 31, 2022	-3.97%	3.58%	24.01	5.96	-11.96
15.	Apr 30, 2022	-14.15%	-8.80%	227.52	98.64	149.81
16.	May 31, 2022	-2.23%	0.01%	9.99	1.28	3.58
17.	Jun 30, 2022	1.72%	-8.39%	0.62	90.79	-7.51
18.	Jul 31, 2022	-6.07%	9.11%	49.02	63.61	-55.84
19.	Aug 31, 2022	-2.70%	-4.24%	13.19	28.95	19.54
20.	Sep 30, 2022	-13.12%	-9.34%	197.39	109.74	147.18
21.	Oct 31, 2022	11.43%	7.99%	110.11	46.93	71.88
22.	Nov 30, 2022	-1.06%	5.38%	3.97	17.97	-8.44
23.	Dec 31, 2022	-6.74%	-5.90%	58.86	49.47	53.96
24.	Jan 31, 2023	17.23%	6.18%	265.60	25.39	82.12
25.	Feb 28, 2023	-5.05%	-2.61%	35.85	14.04	22.44
26.	Mar 31, 2023	7.53%	3.51%	43.54	5.61	15.63
27.	Apr 30, 2023	-1.14%	1.46%	4.30	0.11	-0.68
28.	May 31, 2023	18.59%	0.25%	311.72	0.79	-15.68
29.	Jun 30, 2023	3.15%	4.71%	4.90	12.80	7.92
30.	Jul 31, 2023	3.75%	4.85%	7.91	13.76	10.43
31.	Aug 31, 2023	1.00%	-1.77%	0.00	8.46	-0.20
32.	Sep 30, 2023	-5.08%	-4.87%	36.14	36.10	36.12
33.	Oct 31, 2023	4.10%	-2.20%	10.01	11.12	-10.55
34.	Nov 30, 2023	17.86%	8.92%	286.39	60.56	131.69
35.	Dec 31, 2023	3.03%	4.42%	4.38	10.80	6.88
36.	Jan 31, 2024	8.34%	1.59%	54.80	0.21	3.36
37.	Feb 29, 2024	0.78%	5.17%	0.02	16.29	-0.63
38.	Mar 31, 2024	-1.16%	3.10%	4.39	3.86	-4.12
39.	Apr 30, 2024	-9.06%	-4.16%	99.82	28.06	52.93
40.	May 31, 2024	-5.25%	4.80%	38.24	13.44	-22.67
41.	Jun 30, 2024	19.74%	3.47%	353.77	5.43	43.84
42.	Jul 31, 2024	3.53%	1.13%	6.73	0.00	-0.01
43.	Aug 31, 2024	4.99%	2.28%	16.41	1.32	4.65
44.	Sep 30, 2024	4.61%	2.02%	13.50	0.78	3.25
45.	Oct 31, 2024	4.32%	-0.99%	11.44	4.52	-7.19
46.	Nov 30, 2024	12.48%	5.73%	133.34	21.10	53.05
47.	Dec 31, 2024	1.01%	-2.50%	0.01	13.21	-0.29
48.	Jan 31, 2025	-3.93%	2.70%	23.69	2.45	-7.62
49.	Feb 28, 2025	-8.70%	-1.42%	92.91	6.56	24.68
50.	Mar 31, 2025	-14.37%	-5.75%	234.19	47.48	105.45
51.	Apr 30, 2025	19.95%	-0.76%	361.70	3.60	-36.11
52.	May 31, 2025	5.87%	6.15%	24.41	25.16	24.78
53.	Jun 30, 2025	1.68%	4.96%	0.56	14.63	2.86
54.	Jul 31, 2025	-8.27%	2.17%	84.67	1.06	-9.48
55.	Aug 31, 2025	-2.72%	1.91%	13.35	0.59	-2.82
56.	Sep 30, 2025	0.31%	3.53%	0.39	5.74	-1.49
57.	Oct 31, 2025	-0.11%	2.27%	1.09	1.28	-1.18
58.	Nov 30, 2025	-11.63%	0.13%	157.81	1.01	12.64
59.	Dec 31, 2025	-5.72%	-0.05%	44.24	1.41	7.91
Total (Σ):				4,253.18	1,108.23	1,091.71

Show all

Variance_NOW = Σ(R_NOW,t–R_NOW)² ÷ (59 – 1)
= 4,253.18 ÷ (59 – 1)
= 73.33

Variance_{S&P 500} = Σ(R_{S&P 500,t}–R_{S&P 500})² ÷ (59 – 1)
= 1,108.23 ÷ (59 – 1)
= 19.11

Covariance_{NOW, S&P 500} = Σ(R_NOW,t–R_NOW)×(R_{S&P 500,t}–R_{S&P 500}) ÷ (59 – 1)
= 1,091.71 ÷ (59 – 1)
= 18.82

Systematic Risk (β) Estimation

Variance_NOW	73.33
Variance_{S&P 500}	19.11
Covariance_{NOW, S&P 500}	18.82
Correlation coefficient_{NOW, S&P 500}¹	0.50
β_NOW²	0.99
α_NOW³	-0.19%

Calculations

¹ Correlation coefficient_{NOW, S&P 500}
= Covariance_{NOW, S&P 500} ÷ (Standard deviation_NOW × Standard deviation_{S&P 500})
= 18.82 ÷ (8.56% × 4.37%)
= 0.50

² β_NOW
= Covariance_{NOW, S&P 500} ÷ Variance_{S&P 500}
= 18.82 ÷ 19.11
= 0.99

³ α_NOW
= Average_NOW – β_NOW × Average_{S&P 500}
= 0.93% – 0.99 × 1.14%
= -0.19%

Expected Rate of Return

Assumptions
Rate of return on LT Treasury Composite¹	R_F	4.79%
Expected rate of return on market portfolio²	E(R_M)	17.38%
Systematic risk (β) of ServiceNow Inc. common stock	β_NOW	0.99

Expected rate of return on ServiceNow Inc. common stock³	E(R_NOW)	17.19%

¹ Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

² See details »

³ E(R_NOW) = R_F + β_NOW [E(R_M) – R_F]
= 4.79% + 0.99 [17.38% – 4.79%]
= 17.19%