Meta Platforms/Facebook (META) should acquire Intuit (INTU).

Meta’s Facebook unit has peddled its wares to small businesses for some years. To this end, META agreed to acquire Kustomer (provider of CRM tools to small businesses), in November 2020. That deal finally closed in February 2022. Acquiring Intuit would advance the execution of Meta’s small business strategy.

• Intuit would provide META with additional products and services for consumers and small business customers.
• Intuit would enable Meta to diversify away from its Advertising-focused business model at a time when Meta’s business model is feeling pressure from Apple (AAPL) and a weak global economy.
• Intuit generated revenue of $10.3 billion in the nine months ended April 30th 2022 with $3.6 billion in Cash from Operations over the same period (a 35% Operating Cash Flow margin).
• INTU shares currently trade at 27.5x Enterprise Value to LTM Operating Cash Flow.

Further, Meta will require air cover as it heavily invests in the metaverse (largely AR/VR products and services). Adding Intuit to the portfolio is an easy story to tell given that Intuit’s customer base fits squarely into Meta’s core business.

Related article: A Win for Intuit. A Loss for Facebook

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