We prefer class component when the component has a state and lifecycle; otherwise, the functional component should be used.

In React Native, functional components and class components are two primary ways of creating components. However, with the introduction of React hooks, functional components have become more powerful and versatile, often making them the preferred choice. Nonetheless, there are still some scenarios where using class components might be appropriate:

Complex State Management: If your component requires complex state management, especially if the state needs to be accessed or updated in multiple lifecycle methods, a class component might be more suitable. Class components have a built-in state mechanism, making it easier to manage complex state logic.
Legacy Codebase: In older codebases where class components are already extensively used, maintaining consistency might lead to the continued use of class components.
Usage of Lifecycle Methods: If your component heavily relies on lifecycle methods such as componentDidMount, componentDidUpdate, or componentWillUnmount, class components might be the better choice. Although functional components can use lifecycle methods via hooks like useEffect, in some cases, using class components can make the code more readable, especially for developers familiar with class-based lifecycles.
Optimization with shouldComponentUpdate: In scenarios where you need to optimize performance by preventing unnecessary re-renders, shouldComponentUpdate method in class components provides fine-grained control over when a component should re-render. While functional components can achieve similar optimizations with React.memo or custom shouldComponentUpdate logic in useEffect, class components might be more straightforward in such cases.
Ref Usage: If your component needs to manage refs in a more complex manner, class components provide a more natural way to work with refs using this.refs.

However, it’s essential to note that the React team is continually improving functional components and hooks, and they are now the recommended way to build components due to their simplicity, readability, and performance benefits. Functional components are also more in line with the functional programming paradigm, making them easier to reason about and test. Therefore, unless there’s a specific reason to use class components, such as those mentioned above, functional components should generally be preferred.