Intuit (INTU) Plunges 5.06%: What's Behind the Sudden Sell-Off?

Summary
• Intuit (INTU) tumbles 5.06% to $662.44, its lowest since May 2025
• Q4 revenue of $3.83B and EPS of $2.75 beat estimates, but Q1 guidance of $3.76B disappoints
• 200-day MA at $663.99 and RSI at 22.81 signal oversold conditions
• Options chain sees heavy volume in 640–680 strike calls, with 665C29 contract leading at 78.82% leverage

Intuit’s sharp intraday decline has sent shockwaves through the application software sector, with shares trading 5.06% below Friday’s close. The sell-off follows a mixed earnings report where the company’s conservative Q1 guidance overshadowed strong Q4 results. Technical indicators and options activity suggest a pivotal moment for the stock, as traders weigh near-term volatility against long-term fundamentals.

Conservative Guidance Overshadows Earnings Strength
Intuit’s 5.06% drop stems from a stark disconnect between its Q4 performance and Q1 outlook. While the company reported $3.83B in revenue (up 17% YoY) and $2.75 EPS (beating estimates), management guided for $3.76B in Q1 revenue—$120M below consensus. This conservative stance, attributed to Mailchimp’s temporary usability issues and cautious forecasting, triggered a sell-off. The market’s reaction underscores skepticism about near-term growth sustainability, despite Intuit’s 32.3% free cash flow margin and $6.08B in FY2025 FCF. Analysts now project a 19% upside potential over 12 months, but near-term sentiment remains bearish.

Application Software Sector Volatility: Microsoft (MSFT) Holds Steady
While Intuit’s shares plummet, Microsoft (MSFT), the sector leader, rose 0.77% on the same day. This divergence highlights sector-specific dynamics: Microsoft’s cloud and AI-driven growth story contrasts with Intuit’s near-term execution risks. The broader S&P 500 and Nasdaq Composite gained 1.5% and 1.8%, respectively, indicating Intuit’s decline is stock-specific rather than sector-wide. However, the application software space remains under pressure as investors reassess AI-driven moats and margin resilience.

Options and Technicals: Navigating the Volatility
• 200-day MA: $663.99 (slightly above current price)
• RSI: 22.81 (oversold territory)
• MACD: -17.89 (bearish divergence)
• Bollinger Bands: $668.37 (lower band) vs. $662.44 (current price)

Intuit’s technicals suggest a potential rebound from oversold levels, but near-term volatility remains high. Key support at $640 (lower Bollinger band) and resistance at $670 (Q1 guidance breakeven) will dictate direction. The 200-day MA at $663.99 offers a critical psychological level to watch.

Top Options Picks:
1. INTU20250829C665
• Strike: $665, Expiry: 2025-08-29, IV: 24.37%, Delta: 0.467, Theta: -1.99, Gamma: 0.0166, Turnover: $195,904
• LVR: 78.82% (high leverage), IV in mid-range, moderate delta for directional exposure
• Payoff: If INTU drops 5% to $629.31, payoff = max(0, 629.31 - 665) = $0. Breakeven at $665.00
• This contract balances leverage and liquidity, ideal for capitalizing on a rebound above $665.

2. INTU20250829C660
• Strike: $660, Expiry: 2025-08-29, IV: 23.41%, Delta: 0.552, Theta: -2.22, Gamma: 0.0172, Turnover: $103,956
• LVR: 63.05% (moderate leverage), IV in mid-range, high gamma for sensitivity to price swings
• Payoff: If INTU drops 5% to $629.31, payoff = max(0, 629.31 - 660) = $0. Breakeven at $660.00
• This contract offers strong gamma exposure, making it ideal for a sharp rebound from current levels.

Action Plan: Aggressive bulls may consider INTU20250829C665 into a bounce above $665.00, while cautious traders should monitor the 200-day MA and RSI for oversold reversal cues.

Backtest Intuit Stock Performance
After an intraday plunge of at least -5%, the performance of Intel (INTU) has historically shown positive short-to-medium-term gains. The backtest data reveals favorable win rates and returns for 3, 10, and 30 days following such events:1. 3-Day Performance: The win rate is 57.70%, with an average return of 0.65%. This indicates that nearly six out of ten times, the stock price recovered or exceeded its previous level within three days.2. 10-Day Performance: The win rate increases to 56.81%, with an average return of 1.26%. This suggests that after a slightly longer period, the stock tends to continue its recovery trend.3. 30-Day Performance: The win rate rises to 66.02%, with an average return of 2.84%. This indicates that two-thirds of the time, the stock price exhibits a positive trend in the month following a -5% intraday plunge.4. Maximum Return: The maximum return observed was 5.30% over 30 days, suggesting that while the stock typically exhibits modest gains, there is potential for more significant appreciation in the short term.These findings suggest that investors might consider a phased buying approach, accumulating positions gradually following a significant pullback, with a focus on the first week of the subsequent month, given the historically positive short-term performance. However, it's important to note that past performance is not always indicative of future results, and investors should conduct thorough due diligence and consider their risk tolerance before making investment decisions.

Rebound or Reassessment? Key Levels to Watch
Intuit’s 5.06% drop reflects near-term uncertainty but not long-term impairment. The stock’s 32.3% FCF margin and $6.08B in FY2025 cash flow suggest undervaluation, yet Q1 guidance has shaken confidence. Traders should focus on the $640 support (lower Bollinger band) and $665 resistance (Q1 guidance breakeven). A break below $640 would validate bearish sentiment, while a rebound above $665 could reignite optimism. Meanwhile, Microsoft’s 0.77% gain highlights the sector’s resilience. For now, watch the 200-day MA and RSI for reversal signals—if $640 breaks, short-side options like INTU20250829P640 gain urgency.