Why the Life360 share price is up 17% in two days and could keep rising

The Life360 Inc (ASX: 360) share price is charging higher for a second day in a row.

In morning trade, the location technology company’s shares are up 8% to $5.57.

This means the Life360 share price is now up 17% over the last two trading sessions.

Why is the Life360 share price racing higher?

There are a couple of reasons why investors have been scrambling to buy the company’s shares this week.

The first is the market rebound, which has been most pronounced in the beaten down tech sector.

For example, the S&P ASX All Technology index is up 4% today, which means it has rebounded almost 9% over the last two sessions.

What else is boosting its shares?

Also giving the Life360 share price a big lift this week was a bullish broker note out of Goldman Sachs on Tuesday.

According to the note, the broker has initiated coverage on the company’s shares with a buy rating and $7.50 price target. This implies potential upside of 35% for investors over the next 12 months despite its recent rally.

Goldman commented:

Life360 is heading into its seasonally strongest quarter and is preparing to launch the integration of Tile within the core Life360 app. Execution risk remains (from a technological and go-to-market standpoint), however we are positive on the potential for an integrated Life360/Tile membership to grow subscriber penetration, pricing and retention over time. We see Life360 as reaching a volume/pricing inflection point, with potential structural profitability tailwinds on the horizon from a reduction in effective app store fees.

We see scope for re-rating as Life360 demonstrates pricing leverage, improving unit economics and progress to cash flow breakeven in FY23. We value the Subscription business at 5.5x FY24 EV/GP (90% of our EV) in line with freemium app peers.

All in all, Goldman appears to believe it isn’t too late to jump onboard with this one.

The post Why the Life360 share price is up 17% in two days and could keep rising appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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