Can the record-breaking Life360 share price keep rising?

Analysts are tipping the high-flying tech stock to continue its ascent.

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The Life360 Inc (ASX: 360) share price was on fire on Friday.

So much so, the location technology company's shares ended the session 18% higher at a record close of $17.56.

Why did the Life360 share price break records?

Investors were bidding the ASX 200 tech stock higher after being blown away by its second quarter update.

Life360 reported a 20% increase in second quarter revenue to a record of US$84.9 million and positive adjusted EBITDA of US$11 million.

In light of this strong performance, management upgraded its guidance for FY 2024. It now expects consolidated revenue of US$370 million to US$378 million and positive adjusted EBITDA of US$36 million to US$41 million.

This compares to its previous guidance of US$365 million to US$370 million and US$30 million to US$35 million, respectively.

Can its shares continue rising?

It seems quite likely that the Life360 share price will continue its ascent on Monday.

That's because its US listed shares ended after-hours trade on Wall Street at US$36.50, which is the equivalent of A$55.54.

And with its US shares worth three ASX listed shares, this equates to a share price of A$18.51, which is comfortably ahead of Friday's close price.

But it isn't just that. Brokers are also tipping the Life360 share price to rise further from here.

For example, according to a note out of Bell Potter, its analysts have reiterated their buy rating and lifted their price target to $20.50 (from $19.00). This implies potential upside of almost 17% for investors from current levels.

Bell Potter was impressed with the company's performance ahead of the traditionally strongest quarter of the year. It said:

2Q2024 revenue of US$84.9m was in line with our forecast but adjusted EBITDA of US$11.0m was well ahead of our forecast of US$8.0m. The key metrics of total paying circles, AMR and ARPPC were all ahead of our forecasts with the highlight being a record quarter for growth in paying circles of 132k.

On the back of the strong result and guidance upgrade we have increased the multiple we apply in the EV/Revenue valuation from 6.0x to 6.25x and reduced the WACC we apply in the DCF from 9.3% to 9.1%. This combined with the changes in our forecasts has resulted in an 8% increase in our PT to $20.50 which is >15% premium to the share price so we maintain our BUY recommendation. Potential catalysts include the Q3 result in November – typically the strongest quarter for paying circle growth – and a step up in advertising revenue in both Q3 and Q4. Increased clarity around the new Placer.ai deal could also be a positive as well as early success for Hubble.

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

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