The Life360 Inc (ASX: 360) share price has surged 100% since late March and is, I believe, poised to climb higher. Here's why this ASX tech share has my attention.
Why this ASX tech share has piqued my interest
What does Life360 do?
Life360 operates a platform that aims to protect families and keep them connected. The company's core offering is the Life360 mobile app, which is a market leading platform that has a range of location sharing, driving safety and communication features. Life360 boasts more than 28 million monthly active users (MUA) located in over 160 countries.
Why I'm watching Life360
The most attractive feature of Life360's platform is that it provides users with peace of mind. In addition to location sharing, the platform also provides SOS alerts, roadside assistance, crash detection and driver reports.
Last week, Life360 hosted an investor briefing and provided shareholders with an overview of its new membership offering. The company's membership tiers include a free basic package and silver, gold and platinum paid memberships. Each membership is designed to target families at different life stages, from families with new-borns or teens through to aging parents.
As a result, the new membership options will allow the company to increase its addressable market, increase premium conversion and provide a longer user lifecycle.
The outlook for Life360
During the COVID-19 pandemic, Life360's operations remained strong. However, with many families confined to their homes, there was a decrease in new registrations. As a result, the company has temporarily decreased marketing expenditure and expects a short-term reduction in registration rates.
Despite the impact of the pandemic, Life360 remains in a robust capital position with a cash balance of US$57.5 million allowing the company to fund future cash flow requirements. In addition, with the roll out of its new membership options, Life360 could be well on the way to realising its membership milestones once life returns to normal, post-pandemic.
Should you buy this ASX tech share?
Life360 listed on the ASX last year and is currently trading more than 26% below its 52-week high of $4.34. The COVID-19 pandemic has highlighted how complex modern life has become and how quickly things can change. In my opinion, as a consumer subscription business, the Life360 platform addresses these concerns whilst offering great margins and a strong growth profile.
It is also important to note that Life360 was added to the All Ordinaries (INDEXASX: XAO) during the June rebalance, indicating the long-term potential of the company. The Life360 share price has, however, had a strong run from its low in March. As such, perhaps the most prudent strategy is for investors to keep the company on watch and wait for a pullback before investing.
