Life360 Inc (ASX: 360) shares have jumped back into the green in Wednesday morning trade.
At the time of writing, the technology shares are up around 9% and changing hands at $20.52. That's a sharp rebound from a share price crash yesterday, where Life360 shares ended the day down around 15%.
Even despite today's increase, the shares are still down around 37% for the year to date and are 55% lower than a year ago.
It's made me question, what on earth is going on? And why is the share price so volatile?
Why did Life360 shares crash on Tuesday?
The global location-services provider released its quarterly results ahead of the ASX open on Tuesday.
The result showed strong headline revenue growth and came in ahead of analyst expectations, but it also included a cautious outlook that clearly spooked investors.
Life360's total revenue grew 40% year on year, net income increased 130% year on year, adjusted EBITDA climbed 41%, and the company ended the quarter with US$465 million in cash.
The company also saw a 17% increase in its monthly active users, to just shy of 108 million active users globally.
But it looks like growth momentum is slowing and higher prices have seen some customers exit subscriptions.
Life360 chief financial officer, Russell Burke, said:
Following a strong performance in Q3'26, subscription revenue growth is expected to accelerate due to the momentum in Paying Circle additions through Q3, the shift to higher priced tiers, and the recent price increases across the existing subscriber base. We expect those price increases to soften the rate of US Paying Circle additions in Q4'26, with churn to date in line with our estimates.
While management was seemingly prepared for some customers to drop off, investors were not. Many became spooked and many rushed to sell off their Life360 shares.
Why are the shares rebounding again today?
There isn't any new price-sensitive news out of the company today. It's most likely that bargain-hunting investors have stepped back in after yesterday's sharp sell-off.
I think a 15% share price sell-off, for a result which presented a 40% increase in revenue growth and higher new Paying Circles, was overdone.
Major institutional brokers also supported the stock following the result, framing the dip as an attractive entry point.
RBC Capital Markets, for example, said that Life360's adjusted EBITDA beat their internal forecasts by 11%. The broker reiterated its buy rating and $31.75 target price. The update most likely reassured some investors that actually, there is a lot more value in Life360 shares.
What's the consensus target price for Life360 shares now?
TradingView data shows that analysts are mostly bullish about the outlook for the shares. Out of 14 analyst ratings, 12 have a buy/strong buy rating, and two more rate the stock as a hold.
The average $29.34 target price implies an upside of around 44%, at the time of writing.
The post Life360 shares rebound 9% on Wednesday. What on earth is going on with the ASX tech stock this week? appeared first on The Motley Fool Australia.
Motley Fool contributor Samantha Menzies 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 positions in and has recommended Life360. 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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