Why this top fundie is tipping Life360 shares for outsized gains

Life360 Inc (ASX: 360) shares are marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) location sharing software developer closed yesterday trading for $18.98. As we head into the Friday lunch hour, shares are swapping hands for $19.47 apiece, up 2.6%.

For some context, the ASX 200 is down 0.6% at this same time.

Despite today’s gains, Life360 shares remain down 6.1% over 12 months, underperforming the 6.4% gains posted by the benchmark index.

And the ASX 200 tech stock is down a steep 64.9% since notching an all-time closing high of $55.44 on 3 October.

Among the headwinds, Life360 stock has gotten swept up in the broader tech stock sell-off, driven by concerns that artificial intelligence (AI) could replace a lot of the services these companies currently offer.

However, following that big retrace, Alphinity Investment Management portfolio manager Stuart Welch believes Life360 could be poised for a material rebound (courtesy of The Australian Financial Review).

Life360 shares well-placed for earnings upgrade

Asked which stock in his fund is the most undervalued by the market, Welch pointed to Life360 shares.

Welch said:

Right now, the stock with the largest upside is Life360, which provides connected safety for families, including real-time location sharing, driving safety insights, and emergency response features.

Commenting on his bullish outlook on Life360 shares, Welch added:

We don’t believe that valuation alone drives future share price performance, typically finding that cheaper valuations often reflect the high likelihood of further earnings downgrades. Irrespective of how cheap a stock appears, it often requires analysts upgrading their future earnings forecasts for that stock to realise any apparent valuation upside.

Thankfully for Life360, we are confident of the earnings outlook from here.

What’s the latest from the ASX 200 tech stock?

Life360 reported its fourth quarter and unaudited full calendar year 2025 results on 3 March.

Highlights included a 32% year-on-year increase in revenue to US$489.5 million. And the company achieved a 20% increase in global monthly active users to 95.8 million.

On the bottom line, Life360 reported a gross full-year profit of US$380.8 million, up 36% from 2024.

The ASX 200 tech stock ended the year with US$495.8 million in cash and cash equivalents, up 209% from the prior year.

Commenting on the full-year results, Life360 CEO Lauren Antonoff said:

2025 was a landmark year for Life360. For the first time in company history, we achieved annual net income, reflecting both the fundamental strength of our freemium model and the operating discipline we’ve built over the past several years.

Despite the growth metrics, Life360 shares closed down 17.6% on the day of the results release amid a broader tech stock sell-off.

The post Why this top fundie is tipping Life360 shares for outsized gains appeared first on The Motley Fool Australia.

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