Will Life360's share price rise on social network expansion?

ASX-listed tech company Life360 Inc has recently seen its share price rise on a strong performance for the first quarter, as millions of users take to its location-based networking app.

The company has emerged as a favourite for analysts on the back of rapid increase in subscription levels, pointing to the possibility that the company's popularity could further surge on the back of network effects.

Life360 carves out space as family-based social network

While the market for social networking apps would appear to be saturated given the vast popularity of platforms such as LinkedIn and Facebook, Life360 has managed to amass a growing user base in the world's online ecosystem as a 'family-oriented private social network.'

Its eponymous mobile app seeks to differentiate itself from other online social networks by focusing on family connections, instead of professional relationships or social groups.

A slew of other key functions also differentiates the family-oriented app from other online networks with long-established user bases.

Chief amongst them is Life360's location-sharing feature, which enables users to see where other members are at any time as long as consent is provided within a given social circle.

This function enables Life360 to also provide other fee-based features that could be of critical importance to people who are family members or in close relationships. These features include various insurance products and emergency roadside assistance.

Tech-giants back Life360

The family-based networking app has enjoyed the backing of leading players in the tech sector since its founding in 2008.

By 2013 the company had raised a total of USD$90 million in funding from some of the world's biggest tech companies, including Facebook and Google. The company also entered an agreement with BMW in the same year to integrate Life360's location services into vehicles produced by the iconic German automaker.

In May 2019, Life360 was listed on the ASX, raising AUD$145.5 million in funds to drive global expansion, as well as drive the development of home insurance, auto insurance and home security products.

Since then the company has also sealed multiple acquisitions of apps or technologies that complement its main product.

These include the acquisition in November 2019 of ZenScreen - a California-based app that enables users and parents to track screen usage, and the acquisition in November 2021 of Tile, which provides similar tracking features to Life360.

Analysts upbeat on quarterly update

Life360's latest update indicates that global Monthly Active Users (MAU) had reached a record-breaking 66.4 million by the end of the first quarter, for an increase of 4.9 million compared to the end of the fourth quarter.

The increase marks a record expansion for Life360 in a first quarter, as well as more than double the increase of 2.2 million users posted by the company in the same period the year previously.

The accelerating expansion of the company's user base has driven a boost in Life360's share price, which has risen #% year-to-date.

Analysts also welcomed the latest update, with Goldman Sachs speculating that the rise in subscriptions means FY24 results could come in ahead of expectations.

'Operating metrics can be volatile quarter to quarter, and we note that this follows a relatively softer 4Q23,' the brokerage said in a note.

'However, in our view Life360 has started FY24 strongly and should be comfortably tracking to meeting revenue guidance and potentially exceeding EBITDA guidance.'

Australian brokerage Bell Potter said the latest quarterly results provided a ''positive and unexpected update with two key metrics in 1Q2024 materially exceeding both our and market expectations.'

Bell Potter has reaffirmed its buy rating for Life360, as well as lifted its price target for the tech stock to $16.25.

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