Life360 shares: A generational opportunity to get rich?

I think the Life360 share price could more than double again in the year ahead.

| More on:
A man leans forward over his phone in his hands with a satisfied smirk on his face although he has just learned something pleasing or received some satisfying news.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Life360 Inc (ASX: 360) shares have already helped boost the wealth of many longer-term shareholders.

But even after the strong run higher the share price has enjoyed over the past few years, I believe the S&P/ASX 200 Index (ASX: XJO) tech stock still presents investors with a generational opportunity to get rich.

Of course, everyone's definition of 'rich' will vary. And to potentially earn really big gains from Life360 shares, you'll want to start with a sizeable initial investment.

Now, if you're not familiar with Life360, the company develops family-oriented software for location sharing. Parents can use the company's smartphone app to track their children's whereabouts or to help elderly people and those with special needs stay safe.

And with revenues growing fast, Life360 shares have rocketed 224.9% in 12 months. Taking a step back, shares in the ASX 200 tech stock are up 640.9% over five years. That's enough to have turned a $50,000 investment five years ago into $370,450 today.

Certainly a good start on the way to building generational wealth.

Why Life360 shares could keep soaring higher

Before moving on, note that every investment comes with its own risks. While I'm bullish on the outlook for Life360 shares in the years ahead, the ASX 200 stock could also lose value. Technology changes fast, and we can't rule out the possibility that an unexpected competitor steals some of its market share.

Also, while a fast-rising ASX stock is a great help in building generational wealth, you shouldn't lose track of the golden rule of diversity. A proper wealth-building portfolio will contain far more than one share!

With that said, there are several reasons to believe Life360 shares could post another year or more of outsized gains.

First, is the company's strong growth metrics.

For the third quarter of 2023, Life360 reported an 18% year on year increase in revenue to US$92.9 million. Gross profits of US$70.0 million were up 21% from the prior corresponding period.

Full-year revenue is forecast to be between US$368 million and US$374 million. The company reports its 2024 calendar year results on 28 February.

The second reason I'm bullish on the stock is that with the rapid growth in its market cap, the company appears set to move to an even more exclusive ASX index. This would see it garner even more interest from index-tracking funds and some actively managed funds as well.

According to Sequoia Wealth Management's Peter Day:

We expect the company to be added to the S&P/ASX 100 Index when the next rebalance occurs in early March. This should be a positive result if Life360 is added to this large market capitalisation index.

And the third driver that I think could see Life360 shares really boost investors' lifetime wealth is the barely tapped artificial intelligence (AI) revolution.

As the company's in-house tech evolves and AI begins to play a bigger role, its location-sharing software should experience numerous tailwinds.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

More on Technology Shares

group of traders cheering at stock market
Technology Shares

Codan shares near an all time high. Can they go higher?

Is there more room for growth for this ASX 200 company? 

Read more »

Kid putting a coin in a piggy bank.
Technology Shares

Why I think this ASX small-cap stock is a bargain at $4.41

This tech business has a lot going for it.

Read more »

The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition
Mergers & Acquisitions

WiseTech share price storms higher on $3.25b blockbuster acquisition

What is the company spending billions on? Let's find out.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Happy work colleagues give each other a fist pump.
Technology Shares

Guess which ASX 200 technology stock has outperformed Nvidia over the past 5 years?

This company has been nothing short of impressive.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Technology Shares

Why Goldman Sachs rates this ASX tech share as a top buy

Let's see why the broker rates this stock highly right now.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

WiseTech shares have surged 34% since April. Is it too late to buy?

Can WiseTech shares keep charging higher? Here’s what this investing expert expects.

Read more »