Tax-preparation software firms Intuit and H&R Block saw their shares plunge on Tuesday on a report that the Trump administration is considering a plan to create a mobile app for Americans to file their taxes free with the Internal Revenue Service. Intuit stock fell out of a buy zone on the news.
The Washington Post reported that the leaders of President-elect Donald Trump's "Department of Government Efficiency" have discussed overhauling the tax system to let people file their taxes through a mobile app.
Trump last week appointed billionaire Elon Musk and former pharmaceutical executive Vivek Ramaswamy to lead the DOGE panel. The group has two principal mandates: cut government spending and reduce federal regulations.
However, sources told the Post that the conversations about simplifying the tax system and making a mobile app are highly preliminary. The article describes the proposals as part of early brainstorming and says they would be difficult to implement.
On the stock market today, Intuit stock fell 5.1% to close at 644.17. Intuit shares had been trading in the 5% buy zone of their Nov. 7 breakout from a flat base, according to IBD MarketSurge charts.
Intuit stock is on the IBD Tech Leaders list.
Meanwhile, H&R Block stock dropped 8.2% to 55.40.
Intuit Stock Drop Unwarranted, Analyst Says
Jefferies analyst Brent Thill downplayed the news in a client note Tuesday. He said a free IRS mobile app is "unlikely to be a high priority" for the Trump administration.
The decline in Intuit stock is an overreaction to the media report, he said.
Thill listed several reasons why a mobile tax-filing app is unlikely to happen. For one, the U.S. government doesn't have a track record of building user-friendly software. Also, a pilot program that offered Americans a free-file web portal to fill out their taxes had little success.
Further, Intuit's TurboTax product is designed for paying tax filers who have more complex tax situations, not those who could use a simple app.
Thill rates Intuit stock as buy with a price target of 790.
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