Should you buy the 20% dip on Life360 shares?

The Life360 Inc (ASX: 360) share price has dropped around 20% since early December, as the chart below shows. Declines of this size can be a buy-the-dip opportunity for the right business.

Life360 describes itself as a family connection and safety company that provides a range of services, including location sharing, safe driver reports, and crash detection with emergency dispatch.

The company has grown significantly in the last few years. At 30 September 2024, it had 76.9 million monthly active users (MAU) across more than 170 countries. And the market has recognised this growth with a significant boost to the Life360 share price, sending it more than 200% higher in the last 12 months.

So, what do the experts think of this ASX tech share? The fund manager Firetrail recently pointed out a number of positives about Life360 shares, which may suggest the recent share price decline is a buying opportunity.

Why this ASX tech share is exciting

Firetrail said in its December 2024 monthly update that a key driver of recent success was the announcement in March 2024 of a new advertising revenue stream with a goal of monetising the company's large "freemium" user base of more than 20 million daily active users.

The fund manager pointed out that Life360 believes the advertising opportunity could overtake its subscription business in the medium term. Advertising is projected to reach $300 million in 2024.

Firetrail believes the ASX tech share's listing debut on the NASDAQ in June with the ticker 'LIF' marked a "pivotal moment" for the company and unlocked "new strategic opportunities for growth".

A key factor for the company's positive outlook is its subscriber growth, according to the fund manager, with total monthly active users reaching approximately 77 million, as of the third quarter of 2024.

Firetrail outlined why the company's 2025 plans are compelling:

Looking ahead to 2025, Life360 plans to further develop its advertising business and introduce new verticals for pet and elderly tracking, positioning itself for continued success in the family safety and tracking app market.

My colleague James Mickleboro also recently reported on commentary from Goldman Sachs on why Life360 shares are exciting. The investment bank said:

We believe Life360 remains in the early stages of its multi-year revenue growth opportunity, with subscription growth momentum continuing at scale in the US and internationally, as well as a new high-margin revenue stream in advertising.

Goldman Sachs has a buy rating on Life360 with a $25 price target.

Life360 share price snapshot

In 2025 to date, the ASX tech share has fallen 5%. However, in the last five years, it has risen more than 550%. The experts seem optimistic the company can get back to producing gains.

The post Should you buy the 20% dip on Life360 shares? appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison 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 Goldman Sachs Group and 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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