Short messaging/microblogging service provider Twitter (TWTR) recently announced the acquisition of an Android lock-screen app named Cover and its development team. However, the number of Cover employees joining Twitter and the financial terms of the deal were not disclosed.
Cover was co-founded by Todd Jackson, Edward Ho and Gordon Luk, all of whom happened to be ex-employees of Google (GOOG) and was launched on an invitation-only basis in Oct 2013. Since its launch, app installs have been in the range of 100,000 to 500,000 on Google Play.
Putting off speculations regarding the continuity of Cover on Google Play, the company announced that it has no intention of discontinuing the app immediately.
Cover analyzes a user’s smartphone behavior and then displays six apps on the Android lock screen based on the current location of the user (whether at home or at office). Thus, its basic motive is to improve customer satisfaction by providing them the right apps on a real time basis.
This is Twitter’s first Android-specific acquisition since the inception of the company in Apr 2007. This acquisition highlights Twitter’s mobile-first approach as more than 75.0% of Twitter’s users access the service through their respective mobile devices.
We believe that as more and more new and improved apps are vying for the attention of users, Cover is an important app as it improves Twitter’s relevancy as a real-time platform. This will enable Twitter to retain and expand its customer base, driving growth and profitability, going forward.
Of late, Twitter is facing a number of issues that are troubling its investors. The growing popularity of Facebook’s (FB) Instagram among U.S. smartphone users and monetization problems are major headwinds.
However, we believe that Twitter’s recent initiatives that include the tagging of photos for Apple’s (AAPL) iOS and Google’s Android devices will increase customer engagement going forward.
Currently, Twitter has a Zacks Rank #3 (Hold).
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