Twitter's Fit for a Prince Saudi Prince Alwaleed Bets $300 Million on Social MediaDECEMBER 20, 2011 By ELLEN KNICKMEYER and AMIR EFRATIRIYADH
Saudi Arabia—Prince Alwaleed bin Talal has made a $300 million investment in Twitter Inc., expanding his media empire into social-media sites and giving the Saudi billionaire a stake in an online forum that was widely used by activists in this year's Arab uprisings.
The investment was made several months ago when existing Twitter shareholders sold $400 million of shares, according to people familiar with the matter. At the time, Twitter also raised $400 million from a direct investment led by Russia-based DST Global, known for its investments in social media companies including Facebook Inc. The identities of other investors weren't disclosed.
In an emailed statement from Prince Alwaleed's Kingdom Holding Co., Prince Alwaleed stressed both the investment potential and growing clout of the short-messaging social network in announcing the purchase, which he said was part of a drive "to invest in promising, high-growth businesses with a global impact."
San Francisco-based Twitter, whose investors include several venture-capital firms, was valued by analysts in October at about $8.4 billion, suggesting that Prince Alwaleed's stake is equivalent to 3.6% of the company.
Twitter, which allows users to send messages called "tweets" of up to 140 characters each, said recently the network had grown to 100 million active users who cumulatively send 250 million tweets a day. Facebook, by comparison, has more than 750 million users.
Twitter's fledgling online-ad business is expected to generate around $145 million this year, according to research firm eMarketer, as brands such as Starbucks Corp., luxury-brand giant LVMH Moët Hennessy Louis Vuitton SA and others dip their toes into Twitter's ad products, which aims to target ads based on people's personal interests. That revenue figure is up from $45 million last year.
Prince Alwaleed, a nephew of Saudi King Abdullah, was rated by Arabian Business magazine earlier this month as the Arab world's richest businessman, with more than $21 billion in wealth in 2011.
Kingdom Holding officials didn't provide any further details of the purchase early Monday. Matt Graves, a Twitter spokesman, confirmed the investment.
"I see him as an investor happy to invest in any industry that he might think is lucrative at any stage," said Reda Haidar, a media and Internet analyst based in the United Arab Emirates.
Prince Alwaleed has focused his investments on banks, hotels and media companies, building sizable stakes in companies such as Citigroup Inc., News Corp., Apple Inc. and Time Warner Inc. News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal. He is also developing a new Arabic-language satellite-news channel with Bloomberg LP.
Many people use Twitter as a kind of new-age radio, getting the latest information about everything from transportation delays and retailing promotions to news about various industries by tracking the Twitter accounts of trusted sources, including news agencies, analysts and companies or their executives.
Activists and social-media advocates say Twitter played a strong role in the Arab Spring uprisings this year, helping activists unite, win followers and spread the news of their grievances and demonstrations.
The investment by a Saudi prince in a social-media site that has served as an outlet for Middle East and North Africa dissidents throughout the Arab Spring alarmed some, who feared politically and socially conservative Saudi Arabia might thereby wield a chilling influence on free speech on Twitter.
But Prince Alwaleed's relatively small stake in Twitter isn't likely to have such influence. Twitter Chief Executive Dick Costolo has frequently said the company is "the free speech wing of the free speech party."
Jamal Khashoggi, the prominent Saudi journalist whom the Saudi prince has picked to run his planned news channel, called fears that the Saudi royal would seek to rein in political expression on Twitter "ridiculous."
"He does separate between his investments and his long-term plans from day-to-day politics," Mr. Khashoggi said. The hope among young Saudis he had talked to was that the purchase would help make Twitter "more accessible to Arabs" by involving an Arab in the ownership.
—Spencer Ante in New York contributed to this article.
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