Tax time is approaching fast. This means it could be the perfect time to consider a position in Intuit (NASDAQ:INTU) stock. This is the company that owns TurboTax as well as QuickBooks and Mint. There could easily be an uptick in the sales of all these products in the lead-up to April 15, the day tax returns are due in the United States.
That might be a good reason to consider opening a position in INTU stock, but that’s not the only one.
Intuit also just made a deal to acquire a company with a veritable gold mine of consumer data.
A Major Purchase
On Feb. 24, Intuit made the company’s biggest announcement in quite a while. For around $7.1 billion worth of cash and stock, Intuit plans to acquire consumer-technology platform Credit Karma. According to Intuit’s press release, Credit Karma boasts more than 100 million members across the United States, Canada and the United Kingdom.
That’s an expensive acquisition, to say the least. Still, there are reasons to view it as a smart purchase. Intuit’s press release cited macroeconomic-level trends that suggest a growing audience for the type of service that Credit Karma offers:
“Household debt in the United States hit $14.1 trillion including, among other sources, $9.6 trillion in mortgage debt, nearly $1 trillion in credit card debt and $1.5 trillion in student loan debt. In addition, 23 million people relied on at least one payday loan in 2018 to get faster access to cash. … In fact, 60% of consumers say they are trying to improve their credit score.”
These are disturbing trends, but they bode well for Credit Karma and thus for Intuit. By acquiring Credit Karma, Intuit can service the needs of debt-laden millennials and other adults.
As Intuit CEO Sasan Goodarzi states, joining forces with Credit Karma means that Intuit can “create a personalized financial assistant that will help consumers find the right financial products, put more money in their pockets and provide insights and advice, enabling them to buy the home they’ve always dreamed about, pay for education and take the vacation they’ve always wanted.”
Mining for Data
With this buyout, Intuit will have access to literally thousands of data points on each and every Credit Karma customer. This type of data is considered to be highly valuable. It can provide insight into the customers’ finances and buying habits.
It’s intrusive, but this type of data mining is considered standard practice nowadays. For Intuit, it’s an opportunity to sell its accounting software and tax-prep tools to more consumers.
Venture capitalist Sheel Mohnot even went so far as to suggest that the Credit Karma acquisition could position Intuit as the “Facebook (NASDAQ:FB) for financial services.” Mohnot posited, “If Intuit is able to execute on this … plan, they will have everything about your financial life.”
Not everyone will be comfortable with that thought. Still, it’s a compelling argument as the Credit Karma customer base will undoubtedly add value for INTU stockholders.
My Final Word on INTU Stock
As an investor, there’s not much point in trying to resist the trend toward consumer data mining. This trend is clearly here to stay. I’m giving INTU stock a B rating as the Credit Karma purchase makes good sense in this data-driven world.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.