Intuit stock crash raises stakes ahead of earnings report

Intuit stock price remains in a freefall this month and is now hovering at its lowest level since March 2023. INTU was trading at $380, down by over 52% from its highest point in July last year. This retreat has pushed its market capitalization from over $224 billion to $109 billion. So, will the stock retreat or bounce back after earnings?

Intuit earnings preview

Intuit stock price has crashed in the past few months, driven by the ongoing sell-off in the technology and software industries. 

There are lingering concerns that the growing AI sector will hit its growth in the long term. This includes tools created by mainstream companies like Anthropic and OpenAI, and those made by niche companies will impact its performance.

Still, there are signs that these fears are being exaggerated, as it will likely be hard to disrupt some solutions like QuickBooks and TurboTax. Instead, AI will help to complement their solutions.

Intuit stock price has also crashed because of the ongoing slowdown in the Mailchimp business, which it acquired in 2021 to diversify its revenue sources.

On the positive side, the company’s business has continued doing well despite the ongoing challenges. The most recent results showed that its revenue grew by 18% in the first quarter to over $3.9 billion.

This Global Business Solutions revenue jumped to over $3 billion, while its consumer revenue rose by 21% to over $894 million.

Wall Street analysts believe that its upcoming revenue rose by 14% in the second quarter to over $4.53 billion, with its earnings-per-share rising from $3.32 to $3.68. The annual revenue this year will grow by 12.6% this year followed by 12.5% next year.

Meanwhile, Intuit has become a bargain. Data compiled by Seeking Alpha shows that the company has a forward PE ratio of 16, much higher than the sector median of 23. Its forward PEG ratio has moved to 1.16, which is also lower than the sector median of 1.45.

The Rule-of-40 multiple also shows that it is a bargain. It/ revenue growth was 17%, while its net income margin was 23%, giving it a multiple of 40%.

Intuit stock price technical analysis points to a rebound

The weekly timeframe chart shows that the INTU stock has remained under pressure in the past few months. It has dropped from a high of $809 in July to the current $380.

The stock recently moved below the important support level at $530, its lowest level on April 7. It has remained below all moving averages. At the same time, the stock has retreated in the last four consecutive weeks.

Intuit share price has become highly oversold, with the Relative Strength Index (RSI) dropping to 22, its lowest level in years. This means that it has become the most oversold in years. The Stochastic Oscillator and other top oscillators have also continued moving downwards.

At the same time, the Average Directional Index (ADX) has jumped to 33, its highest level since March 2024. That is a sign that the stock’s freefall is gaining momentum.

Therefore, there is a likelihood that the stock has become highly oversold and may rebound substantially in the coming days. This rebound may happen as soon as next week when it announces its financial results.