I was recently introduced to an app called Life360, which is designed for family and friends to share their location. One of the features of this app is that it allows family members to track how fast people are driving and to call for assistance if someone is in an accident. While the app is free, it also has some additional features, which subscribers pay for.
When I investigated this company, I found it was headquartered in San Francisco but it had listed on the Australian Securities Exchange (ASX) in May 2019.
During the IPO, it raised $112.7 million by issuing 23.5 million new chess depositary interests (CDIs) at $4.79 each, as CDIs allow a non-Australian company to list their shares on the ASX. The company began trading on May 10, 2019, but like most IPOs, it traded down in price and by March 23, 2020, it had fallen more than 70% to $1.51.
Over the past 12 months, however, Life360 has achieved 20% revenue growth year on year despite COVID-19, which has seen its share price rise more than 300% to a new all-time high this week of $6.49 with many analysts promoting the stock as a strong buy. While I like the look of this stock and believe it has the potential to rise further, I think most of the rise has already occurred, at least in the short term.
That said, over the longer-term, this stock looks attractive, as it is in the technology sector and has a broad international client base paying monthly fees, so subscribers can have peace of mind not only knowing where their loved ones are but that they are safe, which means there likely to be very loyal long-term users.
Best and worst performing sectors this week
The best performing sector is Information Technology up 5.59% as Altium rose more than 27% on news it rejected a $5 billion takeover bid from US technology company Autodesk with Altium stating that the offer price of $38.50 undervalued the company.
There were also merger rumours about IRESS, which resulted in it rising more than 22% this week. Utilities is also up more than 2% followed by Healthcare, which is up more than 1%. The worst performing sectors include Financials, Energy and Consumer Staples, as they are all down more than 1% for the week
The best performers in the ASX/S&P top 100 stocks include Altium, as you would expect, followed by Wisetech Global, Appen and TPG, which are all up more than 7%. The worst-performing stocks include Ansell and The Star Entertainment Group as they are both down more than 4% followed by Worley and The a2 Milk Company, which are down more than 3%.
What’s next for the Australian sharemarket
After two weeks of solid gains, the rise on the All Ordinaries Index slowed this week, as it is currently just in the green. As I mentioned last week, the All Ordinaries Index is getting close to my target of 7600 points and while it could trade higher, we should expect the market to peak anytime soon.
While some technology stocks were hot this week, I would caution investors making any quick decisions based on news and speculation, as this can be very fickle. For example, last week Appen was down around 9%, yet this week it is currently trading up more than 7%.
Despite the All Ordinaries Index trading up, it is overdue for a pullback, which I now believe will be in the vicinity of 8 to 12% and, as such, the risk of buying into the market just before it falls away is increasing.