After a tumultuous night on the Nasdaq, shares of Life360 Inc (ASX: 360) are experiencing another significant drop on Wednesday. As of this writing, the location technology company’s shares have fallen by 10% to $41.28. This downturn appears to be largely driven by investor concerns over the company’s slowing monthly active user (MAU) growth.
However, could this market reaction be an overreaction? Bell Potter, a prominent brokerage, seems to think so. The firm has highlighted that Life360 recently delivered a robust quarterly performance, which exceeded expectations in several key areas.
Understanding the Market Reaction
Despite Life360’s strong quarterly results, the market’s attention has been fixated on the company’s MAU growth, which did not meet expectations. Bell Potter notes that this was a strategic decision by Life360 and should not be a cause for concern. According to the brokerage, the company’s third quarter 2025 revenue and adjusted EBITDA were $124.5 million and $24.5 million, respectively, surpassing forecasts by 3% and 26%.
“3Q2025 revenue and adjusted EBITDA of US$124.5m and US$24.5m were 3% and 26% ahead of our forecasts. The key metrics of total paying circles, AMR and ARPPC were all in line with or slightly above our forecasts while MAU was the one miss at 91.6m versus our forecast of 94.2m,” Bell Potter explained.
CEO Lauren Antonoff addressed the MAU concerns, stating there had been “an intentional shift in our marketing to focus paid media on users who are more likely to retain and convert.”
Strategic Adjustments and Future Projections
In light of the company’s latest performance, Bell Potter has revised its estimates for the near term. The brokerage has upgraded its revenue forecasts for 2025, 2026, and 2027 by 1%, 11%, and 11%, respectively. They now project 2025 revenue to reach $480 million, aligning with the midpoint of the company’s guidance range.
“We have upgraded our revenue forecasts in 2025, 2026, and 2027 by 1%, 11%, and 11% and now forecast 2025 revenue of US$480m which is close to the middle of the guidance range,” Bell Potter stated.
Furthermore, Bell Potter has also increased its adjusted EBITDA forecasts by 7%, 4%, and 5%, with a 2025 adjusted EBITDA projection of $86 million. The brokerage assumes the acquisition of Nativo will contribute to revenue and adjusted EBITDA starting in 2026.
Investment Implications: A Potential Upside
Despite the current dip in share price, Bell Potter has maintained its buy rating on Life360 shares, raising its price target from $47.50 to $52.50. This new target suggests a potential upside of 27% for investors over the next 12 months.
“There are no changes in the key assumptions we apply in any of our valuations and we continue to apply multiples of 12x and 62.5x in the EV/Revenue and EV/EBITDA valuations and an 8.3% WACC in the DCF,” the broker commented.
Bell Potter remains confident in Life360’s strategic approach, noting that the slower-than-expected MAU growth was intentional and accompanied by an increase in conversion rates. CEO Lauren Antonoff emphasized, “the strategy is working.”
As investors weigh their options, the current market volatility presents a potential buying opportunity for those who trust in Life360’s long-term strategy and growth potential. With the company’s strategic adjustments and Bell Potter’s optimistic outlook, the dip in Life360 shares may indeed be an attractive entry point for investors.
