TIP835: Intuit (INTU): The S&P 500's Biggest Loser w/ Shawn O’Malley & Kyle Grieve

Intuit compounded its stock at nearly 24% per year from 2015 through 2025 but has since fallen roughly 60% from its peak above $800 per share to below $300, making it the S&P 500's worst performer in 2026. Its price-to-earnings ratio has collapsed from approximately 60 times to 16 times against a median of nearly 50 times over the prior decade. Shawn O'Malley calls it potentially the most compelling large-cap opportunity of the year, while Kyle Grieve notes the underlying business kept growing at double-digit rates throughout the selloff, creating a sharp disconnect between fundamentals and market sentiment.

Despite the repricing, Intuit grew revenue 15% and operating profits nearly 30% year over year in the last 12 months, with operating margins rising and sitting near 30%, comparable directionally to Alphabet. Management targets reaccelerating revenue growth toward 20% per year by 2030. O'Malley argues that at minimum the stock could double simply by reverting to a market-average multiple, given it currently trades at roughly a 50% discount to the S&P 500.

TurboTax may represent as much as two-thirds of Intuit's operating income and is the center of the bear case. DIY tax volumes peaked in 2022 and are down roughly 9% cumulatively since, with bears arguing large language models can answer any tax question and make TurboTax unnecessary. O'Malley counters that Intuit makes its money on assisted filings where customers pay hundreds of dollars for a combination of AI tools and human expertise, not on simple DIY filers who might leave. TurboTax Live, which connects users to more than 12,000 licensed accountants and tax attorneys, has compounded at roughly 38% per year for over five years and now represents a majority of TurboTax revenue. The DIY market is roughly $5 billion while the assisted market is roughly $37 billion, and Grieve argues bears are focused on a small mature slice shrinking at about 1% per year while the company attacks a market ten times larger.

QuickBooks holds roughly 85 to 90% market share among U.S. small businesses and is the segment both hosts view most favorably. Switching costs are significant because migrating years of reconciled transactions, payroll records, and tax history carries large costs relative to a negligible subscription fee saved. Grieve raises the bear case that an AI agent could automate painful data migration and re-enter tax records by reading documents, potentially undermining that moat. Intuit is also moving upmarket through the Intuit Enterprise Suite targeting mid-sized businesses that have outgrown standard QuickBooks but cannot justify full ERP costs. IES drove roughly 40% mid-market revenue growth in its first year, and customers who upgraded more than doubled their spending with Intuit. Grieve calls IES the good kind of diversification because it retains customers who love the product but have simply grown too large.

Credit Karma, acquired for $8 billion in 2020, earns revenue by directing traffic to financial product companies and taking no financial risk, while integrating directly with TurboTax to create cross-sell opportunities and lower customer acquisition costs year-round. O'Malley acknowledges Credit Karma faces clearer pressure from large language models since users could simply ask ChatGPT for credit card recommendations and does not claim a wide moat there. MailChimp, acquired for $12 billion in 2021 as part of roughly $20 billion in acquisitions over about 12 months, is characterized by O'Malley as not a home run and an obvious fit inside the ecosystem, comparing it to Peter Lynch's concept of diworsification.

Intuit recently announced a 17% workforce layoff alongside an $8 billion share buyback program, with revenue per employee estimated to rise from $633,000 in 2017 to approximately $1.2 million after the cuts. O'Malley flags a modest concern that the layoffs may have been driven partly by pressure from the stock decline rather than purely operational necessity. Stock-based compensation has doubled as a share of revenue since 2020 to roughly 10%, and buybacks are largely offsetting dilution rather than reflecting genuine conviction about undervaluation. CEO Sasan Goodarzi owns only about $5 million in shares after seven years in the role, which both hosts view as a weak alignment signal.

At roughly $270 per share, Intuit trades at approximately 15 to 16 times trailing reported earnings and around 10 times forward earnings. O'Malley estimates fair value near $400 per share, considers shares attractive at $320 or below, and projects an 18% annual return over five years at current prices. He proposes adding Intuit to the intrinsic value portfolio below $300 as up to a 5% position. Grieve agrees to initiate a 2% tracker position with the option to increase on higher conviction or a lower price, citing unresolved questions about the non-QuickBooks segments as the reason for the smaller initial allocation. Both agree the central question is whether Intuit's moat is widening or shrinking, and both agree the market is pricing in a more severe outcome than the evidence currently supports.