Life360 Inc (ASX: 360) shares had a difficult session on Tuesday.
The family safety and location technology company's shares crashed deep into the red following the release of its first-quarter update and a tech sector selloff.
Does this make the tech stock a bargain buy now? Let's find out what Bell Potter is saying.
Image source: Getty Images
What is the broker saying about Life360 shares?
Bell Potter highlights that Life360's first-quarter update revealed beats across everything but monthly active users (MAUs). However, the latter was impacted by a technical issue on Android devices, which has since been resolved. It said:
1Q2026 revenue and adjusted EBITDA of US$143.1m and US$17.1m were 4% and 18% ahead of our forecasts and 4% and 14% ahead of VA consensus. The key positive of the result was the strong paying circle growth of 201k q-o-q which was more than double our forecast of 99k and well ahead of VA consensus of 109k. The key negative was the MAU growth of only 2.0m q-o-q which was well below our forecast of 2.6m and further below VA consensus of 3.1m.
On the conference call, CEO Lauren Antonoff said the MAU growth in Q1 was negatively impacted by "technical issues" and these have now been largely resolved though there will still be some impact in Q2. The company also disclosed advertising revenue for the first time which was US$19.7m in Q1 and ahead of our forecast of US$18.2m.
It was also pleased to see management upgrade its revenue and earnings guidance. It adds:
Life360 upgraded its 2026 revenue and adjusted EBITDA guidance from US$640- 680m and US$128-138m to US$650-685m and US$130-140m. The company did, however, reduce the MAU growth guidance from 20% to 17-20%. The bottom end of that range requires average growth of 4.8m in each of the next three quarters – versus 2.0m in Q1 – while the top end requires 5.7m.
Big potential returns
According to the note, the broker has retained its buy rating on Life360 shares with a slightly trimmed price target of $32.50 (from $35.50).
Based on its current share price of $17.92, this implies potential upside of 81% for investors over the next 12 months.
Commenting on its buy recommendation, Bell Potter concludes:
We have reduced the multiple we apply in the EV/EBITDA valuation from 35x to 30x and also increased the WACC we apply in the DCF from 9.5% to 9.6% for conservatism and the continued general weakness in the tech sector. The net result is an 8% decrease in our TP to $32.50 and we maintain our BUY recommendation. There is perhaps a lack of short term catalysts but we do see sequential improvement each quarter in revenue and EBITDA for the remainder of the year.
