Despite turbulent times with the COVID-19 Omicron variant emerging, there is one particular ASX technology stock that numerous experts have their money on currently.
San Francisco outfit Life360 Inc (ASX: 360) makes software that allows parents to track teenagers, although through new products and acquisitions it is quickly diversifying from that use-case.
After listing on the ASX in May 2019, it was a tough couple of years for shareholders as the business struggled to capture the market's attention.
But that's all changed this year, with the Life360 shares soaring by more than 210%.
Even with Monday's Omicron-triggered sell-off, the Life360 stock price managed to gain 1.7% to trade for $12 in the afternoon.
Despite the ballooning valuation, why is this stock still so attractive?
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Users are hooked, and so is Zuckerberg
Wilson Asset Management portfolio manager Tobias Yao is impressed by how hooked Life360 users are to the software.
"Despite having over 30 million active customer users, its user engagement is really high," he said in a Wilson video.
"The users love the utility and love the product. That's very important for a freemium model like Life360."
According to Yao, his fund was initially prompted to buy Life360 shares earlier this year when a famous name was appointed to its board.
"It was on the back of the appointment of Randi Zuckerberg, sister to Mark Zuckerberg and one of the early Meta Platforms Inc (NASDAQ: FB) employees," he said.
"Given her profile, and the amount of opportunities that would come across her desk, we thought it was a huge vote of confidence that she decided to choose Life360."
And despite the spectacular rise this year, Yao reckons Life360 shares are still pretty cheap.
"The valuation is actually undemanding relative to many of its international peers," he said.
"We think the share price still has material upside driven by continued top-line growth — as well as multiple expansion on the back of people getting more comfortable with the growth story."
Life360 shares are still cheaper than peers
Another bull for Life360 is Tribeca Investment Partners portfolio manager Simon Brown.
He told The Motley Fool's 'Ask A Fund Manager' earlier this month that it was among the 2 biggest holdings for his Smaller Companies fund.
"It's done incredibly well for us and it remains our largest stock and we remain really supportive and are very confident that it continues to present plenty of upside from here."
Bell Potter analysts are also fans, this month setting a target price of $14.75 for Life360 shares with a "buy" rating.
As The Motley Fool reported, Bell Potter compared it with a similar company in the US that recently listed — and found Life360's valuation much more palatable.
"Nextdoor Holdings Inc (NYSE: KIND) stock is now trading on an EV/revenue multiple of circa 23x based on the mid-point of the upgraded 2021 guidance and this compares to a multiple of circa 13x for Life360 based on our 2021 revenue forecast of US$111 million," the memo read.
"The multiple of Nextdoor is therefore significantly higher than that of Life360 even though, in our view, Life360 is a higher quality company given it generates most of its revenue through subscription whereas Nextdoor generates most of its revenue through advertising."
