ServiceNow sinks after CEO warns global tech firms fail to beat strong dollar

A strong US dollar is holding back tech brands in an environment that has already been hit by strong macroeconomic factors. ServiceNow CEO Bill McDermott told CNBC Jim Kramer.

“You have 41 years of high inflation. The dollar is now the highest it has been in two decades. Our interest rates are rising. People are worried about safety. You have a war in Europe. not really,” McDermott said in an interview that aired on “crazy money“After the call to close on Monday.

“Now you will see a dollar headwind against well-known tech brands,” the CEO added. “Now nobody is going to overtake the currency.”

Shares of ServiceNow, which helps companies and organizations digitize their workflows, fell 13% on Tuesday following McDermott’s comments, which were intended as a general industry watch rather than ServiceNow-related news, as the company enters a quiet period ahead of its latest report. . quarterly earnings as of July 27.

Tech stocks have been rocked by the stock market, which has faced geopolitical turmoil, high inflation, higher interest rates by the Federal Reserve and the Covid-induced shutdown in China. Several tech giants are expected to report their quarterly earnings around the next month, setting the tone for the entire industry.

However, McDermott remains adamant that tech companies are the key to helping the US economy weather and navigate this turbulent environment.

“If you think about energy, the dislocation caused by the war in Europe, and this reallocation of priorities that I’m talking about, you see longer cycles. [to close deals] in Europe. We’ve seen that,” McDermott said, “but it doesn’t fundamentally change the narrative that technology is the only way to overcome headwinds.”

The shift in priorities he’s talking about is an increase in demand for quick ROI—another sign of caution in the current environment.

“The enterprise has a new level or prioritization. And I’ve seen it since we last met, Jim, shifting into a new gear. When companies first say, “Which platforms do we want to bet on,” and then try to prioritize, McDermott said.

“Now there is one filter for all of this. And that’s a quick return on investment. And if you can’t implement an architecture there that gives the client a quick payback, there is a chance that you will be postponed, ”he added. .

Stifel said in a note Tuesday that he thinks the company will “probably” lower its expectations when it reports earnings, citing McDermott’s comments about the shift in priorities. The investment bank also expects other companies in the industry to follow suit in the coming weeks.