Intuit stock is the worst performer in the Nasdaq 100 Index this year: buy the dip?

Intuit stock price has crashed this year and is now hovering at its lowest level since September 2020. INTU has plunged 62% from its July last year high, making it the top laggard in the Nasdaq 100 Index this year. Its market cap has slumped from over $215 billion to $83 billion today.

Intuit stock has crashed amid SaaSpocalypse

INTU stock price has crashed in the past few months as concerns about SaaSpocalypse continued. SaaSpocalypse is a concept where analysts believe that artificial intelligence (AI) tools will disrupt software companies.

Intuit is one of the top SaaS companies that may experience this disruption. For one, it is a giant software company that offers several solutions like TurboTax, CreditKarma, QuickBooks, and Mailchimp. 

While some of these solutions may be disrupted by AI tools, the reality is that companies will find it hard to disrupt these platforms. For example, it is hard to imagine an accounting platform that will replace QuickBooks, the most popular software in the industry.

It will also be hard to disrupt companies, some of the other solutions like CreditKarma and TurboTax. Indeed, in some instances, it is likely that AI will help to supercharge some of these businesses and even save it money.

The only struggling company in Intuit’s portfolio is MailChimp, a company it purchased in a $12 billion deal funded by cash and stock. MailChimp, a top player in the email marketing industry, is no longer growing as it used to before. 

Intuit’s business is still growing

The most recent results showed that Intuit’s business was still growing. Its revenue rose by 10% to $8.6 billion, with its Global Business rising by 15% and its consumer rising by 8%. The two made $3.3 billion and $5.3 billion, respectively.  Excluding MailChimp, its global business’s revenue growth was 17%.

Wall Street analysts believe that Intuit’s business will continue growing this year. The average estimate among 29 analysts tracking the company is that its annual revenue this year will grow by 13% to $21.37 billion. It will then grow by 11% to $23.8 billion next year. An above 10% revenue growth for a software company like Intuit is quite solid.

Intuit has worked to offset its slowing business growth by focusing on capital returns to investors. It returned over $1.6 billion to investors through share buybacks and the management authorized another tranche of $8 billion.

Intuit has also become a bargain company, with its forward price-to-earnings ratio standing at 12, much lower than other software companies. It is also much lower than its historical average of 34. This makes it a good candidate to benefit when dip-buyers step in.

READ MORE: Intuit to cut 3,000 jobs, Reuters reports, as stock falls ahead of earnings

INTU stock price technical analysis

INTU stock chart | Source: TradingView

The daily chart shows that the Intuit share price has been in a strong downward trend in the past few months and is now at its lowest point in years. It has constantly remained below all moving averages, a sign that bears remain in control for now.

The stock has also crashed below the important support level at $350. This is both a psychological level and its lowest point in February and April this year. 

Therefore, the most likely scenario is where the INTU stock retreats further in the near term. It will then start going up once investors start buying the dip. In the long0term, there is a likelihood that the stock will retest the key resistance level at $500.