Why the Life360 (ASX:360) share price is sinking 9% today

a man sits at a computer in deep thought with hand on chin in a darkened room as though it is late and night and he is working on cybersecurity issues.

The Life360 Inc (ASX: 360) share price has returned from its trading halt and is tumbling lower.

In early trade, the mobile app maker’s shares were down as much as 9% to $12.33.

Why is the Life360 share price sinking on Thursday?

The catalyst for the weakness in the Life360 share price on Thursday has been the completion of the institutional component of its fully underwritten A$280 million capital raising.

According to the release, Life360 has raised A$88.7 million via its institutional entitlement offer and a further A$160.2 million through an institutional placement at $12.00 per new share. This represents an 11.1% discount to the Life360 share price prior to its trading halt.

Management advised that the capital raising received strong demand from both existing and new investors.

A fully underwritten retail entitlement offer, which will raise approximately A$31.1 million, will open on Tuesday 30 November.

Why is Life360 raising funds?

The proceeds from the capital raising will be used to acquire 100% of items tracking company Tile for a purchase price of up to US$170 million plus up to US$35 million in retention awards, representing a total consideration of up to US$205 million. This is the equivalent of approximately A$282.8 million.

Management notes that the combination of Life360 and Tile creates an integrated market leader in location solutions for all life stages. This enables a seamless experience for families that integrates people, pets and things.

It also highlights that Life360 will be the only vertically integrated, cross-platform solution of scale in the market and will be well-placed to take advantage of the growing location solutions category.

Life360’s Founder and CEO, Chris Hulls, commented: “We are delighted with the overwhelming institutional take up of our entitlement offer for the acquisition of Tile. We are grateful for the support of our existing shareholders, and pleased to welcome new shareholders to the register. Together they have demonstrated pleasing confidence in our vision of integrated location solutions for all life stages, enabling a seamless experience for families that integrates people, pets and things. We are excited to welcome the Tile team into the Life360 circle and look forward to working together to deliver our market leading solutions so that families can live fully.”

Are Life360’s shares in the buy zone?

The team at Morgan Stanley was pleased with the acquisition. In response, the broker retained its overweight rating and lifted its price target to $16.50.

Based on the current Life360 share price, this implies upside of ~33% over the next 12 months.

The post Why the Life360 (ASX:360) share price is sinking 9% today appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

from The Motley Fool Australia https://ift.tt/3HOVtKR

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s