It is easy to assume a falling share price means a deteriorating business.
With Life360 Inc (ASX: 360) shares, that assumption would be wrong.
Life360 shares are down 29% in the calendar year to date. Shares have been caught up in the broader rotation away from high-multiple ASX technology names.
Yet Christopher Watt from Bell Potter Securities has a buy rating on this ASX 200 tech share, and his reasoning is worth understanding before writing this one off as just another falling growth stock.
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Why Life360 shares have lagged the business
Life360 provides a mobile family safety app used to track location, monitor driving behaviour, and provide emergency assistance for families.
The business itself has not been struggling.
Today, Life360 trades on a price-to-earnings multiple of just 28x. This multiple looks low for a company with this kind of subscriber growth trajectory.
This gap between a falling share price and a growing underlying business is the kind of situation income and growth investors are trained to look past the headlines for.
What is actually driving subscriber and revenue growth
Life360 has been steadily expanding its monetisation strategy beyond its original subscription model.
The company has diversified into advertising revenue and data partnerships, reducing its reliance on subscription growth alone to drive the top line.
This diversification gives Life360 multiple, less correlated revenue streams. This is a structural advantage over single-product software companies that are entirely dependent on subscriber growth to grow revenue.
Life360's advertising revenue grew 329% year-on-year to US$19.7 million in Q1 2026 following the Nativo acquisition. Encouragingly, core subscription revenue grew a separate 36% over the same period.
A broader monthly active user base, paired with a growing advertising revenue stream layered on top, has kept underlying fundamentals improving even as the share price has fallen.
Why Bell Potter sees a buy for Life360 shares
Bell Potter's buy rating reflects a view that the market is mispricing Life360 relative to its growth trajectory and improving monetisation.
When a stock has been swept up in sector-wide selling pressure rather than company-specific bad news, the eventual repricing, once sentiment turns, can be sharp.
This is the bet implicit in Bell Potter's rating.
The risks worth understanding
Life360 operates in a competitive market.
Major technology platforms, including Apple and Google, have built or could build competing location-sharing features directly into their own ecosystems.
Life360's ability to keep growing depends on continuing to out-innovate larger competitors with greater resources.
Furthermore, ASX technology shares as a group remain sensitive to interest rate expectations, meaning Life360 shares could continue to move with broader sector sentiment regardless of how the underlying business performs in the near term.
Foolish takeaway
Life360 shares are down 29% in 2026, but the underlying business tells a different story from the share price chart.
A reasonable earnings multiple, a diversifying revenue base, and a buy rating from an analyst willing to look past the recent selling all point in the same direction.
For investors who believe the sector-wide tech sell-off has been indiscriminate rather than company-specific, Life360 is a name worth understanding in depth before dismissing it on price action alone.
