Meerkat is on its way to joining the ranks of user-generated verbs such as Google (NASDAQ:GOOGL) and Snapchat. The app streams live video and is inextricably linked to Twitter (NYSE: TWTR). Its simple interface automatically sends a tweet to your Twitter (NYSE:TWTR) followers when you begin streaming a video and allows you to see who is viewing the video. The starkly ephemeral nature of the application differentiates it from other platforms such as Vine and Snapchat. Once the live video is over, the ability to watch it disappears. However, one caveat allows users to save the live stream and upload it to YouTube.
Meerkat, formally known as Yevvo, was developed by a San Francisco based startup called Live on Air and launched on February 27. The application recently announced $12 billion raised in Series B funding, the majority of which came from Greylock Partners, a leading venture capital firm in Silicon Valley. Different sources estimate the deal values Meerkat between $40 and $52 million.
However, Meerkat hit a hurdle last week when Twitter inconspicuously purchased Periscope, another streaming platform. The $100 million acquisition caught the public off-guard as Twitter successfully avoided sharing the acquisition with the press until it was complete. Periscope confirmed the move in a tweet on March 13, although the platform is still only in private beta testing.
Since Periscope is a competitor of Meerkat, Twitter quickly limited Meerkat access on its platform. Meerkat was only afforded a few hours of notice before the restrictions went into place. The small Meerkat team acted swiftly to build new features to make it easier for the platform to function independently from Twitter.
The Meerkat team developed a companion service that makes it easier for users to save live stream videos. Users can now add the hashtag #Katch to the description of their videos on Twitter, which will automatically save and upload them to YouTube. This feature may detract from the ephemeral nature of Meerkat, but its popularity and use will ultimately be left up to Meerkat users.
Though investors were recently wary of Twitter due to decelerated user growth, analysts seem to be reiterating more bullish ratings. On March 13, analyst Doug Anmuth of J.P. Morgan reiterated an Overweight rating on Twitter with a $67 price target. Anmuth cites improved video services through the platform as a catalyst for the rating, noting that videos will be more engaging than words. Although Twitter is struggling to get users to return to the site, Anmuth thinks that the company’s new office in Hong Kong and recent Periscope acquisition will strengthen its user base.
Sarah Hindlian of Brean Capital initiated coverage on Twitter with a Buy rating on March 16. She believes that Twitter’s new features such as online videos and syndicated advertisements will improve user experience and increase monetization of the site. Hindlian has an 80% overall success rate recommending the stock with a +3.3% average return per recommendation.
The top analyst consensus for Twitter on TipRanks is Moderate Buy.
Disclosure: All Twitter recommendations sourced from TipRanks.