Life360 extends losses on possible indices re-weighting 'confusion'
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The news: Life360 plunged for the second consecutive trading session on the ASX despite the ASX- and Nasdaq-listed technology company making no substantive announcements this week.
The numbers: Shares in the tracking app maker were down 4.3% to $23 by 11:30am AEDT, having tumbled 8.3% on Monday.
The context: Bell Potter's director of institutional sales and trading Richard Coppleson said Life360 was seen as having a "big chance" to join the ASX 100 Index, as part of the latest S&P Dow Jones Indices quarterly review. But, as announced after market closed on Friday, no changes were made to the ASX 100 Index for the upcoming quarter.
In his Coppo Report he noted the share price weakness more likely stemmed from "a lot of confusion out of the US". He flagged a possible miscalculation by the Russell US Indices regarding Life360's share count, whereby only its US stock — and not its Australian stock — was included in the re-weighting.
Life360, which listed on the Nasdaq in June, joined the Russell 2000 and Russell 3000 indices in September as part of the quarterly Russell US Index initial public offering additions.
What they said: "So looks like some instos (and some 'hot money') who were buying the stock ahead of index buying in the Russell 2000 Index on 20th Dec — were selling back out today [Monday]," the Coppo Report said.
"So this looks like a liquidity event that needs to play out and then once that has passed company will go back to trading on results and growth numbers."
The source: The Coppo Report
