The Life360 Inc (ASX:360) share price has gone into overdrive today, finishing up 9.39% to $11.30.
The company was helped by a broader market gain across the S&P/ASX Information Technology, which finished 2.15% higher.
However, the business has also shared two key announcements, which have supported the share price rise.
Director buys the dip
Independent director and venture capital investor James Synge purchased $522,752 worth of shares on Monday and Tuesday.
At the time, the share price had fallen 25% from the highs it had reached just the month before.
It’s rare to see a director buying six-figures worth of shares on-market and unprompted, especially after a big price fall.
To the market, this signalled confidence in Life360’s long-term vision and likely led to the rerate today.
Inclusion into the ASX 200
With Oil Search Ltd (ASX: OSH) set to depart the index, Life360 has been chosen as the company to join the S&P/ASX 200 from December 13.
The S&P/ASX 200 is largely considered to be the benchmark index, with several passive funds owning assets based on the index.
When a company is added to an index, the underlying funds must purchase shares.
Depending on the index, this can create a short-term bump in demand for shares. Subsequently, the share price rises as passive funds buy up shares.
Given the ASX 200 index is widely held by investors, product providers such as Blackrock and State Street will be quickly trying to snap up shares before the December 13 inclusion date.
What’s next for the Life360 share price?
It’s been a bumpy ride for shareholders since the business announced the acquisition of Tiles and an associated $283 million capital raising at $12 per share.
With the share price currently at $11.28, investors who are thinking of purchasing shares in the raising would likely be better off purchasing shares on market at discount.
The company did note that the institutional entitlement offer had a take-up rate of 94.3%. This infers solid demand for shares at $12.
Given the inclusion into the index and the upcoming listing in the United States, the Life360 share price should perform strongly in the near term.
Is now the time to buy Life360 shares?
I currently own shares, and would likely purchase more if it wasn’t already such a large part of my portfolio.
The attraction of buying today over participating in the capital raising is twofold.
First, you get a lower price than the raising.
Secondly, you don’t have to wait to be allotted the shares. Instead, shares will be in your account straight away.
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