Today we are going to re-enter a previous holding in Life 360 (ASX: 360).
For those unfamiliar, Life360 (360) has a market leading app for families, called Life360.
One way to view 360’s core offering is a provider of family safety services. Users download the app which incorporates mobile phone GPS data. Numerous services are then available including location safety (families can track members), driving safety (crash detection and roadside assistance) and emergency assistance.
Besides the family-based app, 360 is also a leader in locating people, pets and things. Broadening their product suite, 360 also offers wearable devices (called tiles) which can be attached to items such as wallets, keys, handbags, luggage and pets.
They have over 61 million monthly active users across 150 countries, ranked the 15th most used app in the US based on daily active users, and in 2021, 1 in 10 US families used the 360 platform.
Besides substantially beating guidance and consensus in their recent financial reporting, the main reason for re-entering 360 derives specifically from their new strategy to monetize in app advertising to their enormous free user base (paid users will not see ads), with talk suggesting that this revenue could, over time, match the generated revenue from its subscription revenue.
Speaking on this amazing opportunity during 360’s Q4 & Full Year earnings call, co-founder and CEO Chris Hulls stated:
“Over the long run, we think the monetization of our free users could equal subscription revenue. We don’t have an exact time line for that. But when we were looking at strategy for the year, we’ve done some early testing on advertising that went better than planned and seeing the success in the market. We say here’s an opportunity to do something that has a much quicker payback than longer bets with new verticals with much lower risk.”
The Technicals
Given much of the questions from analysts and shareholders during the conference call were based around the new advertising strategy, we can see the effect this news had on 360’s share price. Upon release, buying conviction accompanied the second largest volume day since 360’s listing 5 years ago. Price then made a subtle series of higher highs and higher lows, although, with the recent minor pullback in the general market, 360’s uptrend has stalled with price looking to test a recent demand area around that $11.90 area. Also, when compared to the general market, 360 has outperformed the XJO by 65% over the last 3 months and 30% over the last 6 months.
Trade Action
- Quantity: Buy 500 shares
- Entry: Buy up to $13.50
- Stop Loss: $11.50
- Target Price: No target
