Normally, word of layoffs gives stocks a boost, as businesses are about to lower costs and are willing to do what’s needed to get there. The human cost, however, is seldom factored in. But for Intuit (NASDAQ:INTU), the tax prep software giant, layoff news didn’t help much, and shares sank nearly 4% in Wednesday afternoon’s trading.
Intuit is dropping close to 10% of its roster—about 1,800 jobs, all told—in a bid to raise cash to put behind artificial intelligence (AI) operations. Intuit has been working toward AI-driven accounting and tax prep solutions for some time now, and this latest move is just the next step. Intuit plans to close two entire offices in Edmonton, Canada, and in Boise, Idaho.
However—and this may be why there was no stock jump—the 1,800 jobs lost won’t be much of a savings. Intuit plans to hire 1,800 people to engage in engineering and product development, as well as “customer-facing roles,” which will limit the cost savings. Analysts—like Kirk Materne of Evercore ISI—believe that the moves represent an Intuit that is “…bullish on its growth prospects.”
All this is happening at the same time a new class-action lawsuit is boiling up against Intuit. The lawsuit alleges that Intuit “…failed to adequately safeguard sensitive data which was compromised in a TurboTax and Credit Karma data breach disclosed in March 2024,” according to Top Class Actions.
The suit also alleged that Intuit “…failed to adequately train employees about cybersecurity.” Worse, the original filer of said suit, Joseph Garite, noted that he had experienced fraud as a result of the data breach. Garite, in turn, filed the lawsuit “…on behalf of all U.S. residents whose personally identifiable information (PII) was compromised in the data breach.”
Turning to Wall Street, analysts have a Strong Buy consensus rating on INTU stock based on 19 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 35.16% rally in its share price over the past year, the average INTU price target of $733.28 per share implies 17.17% upside potential.
