Prince Walid bin Talal of Saudi Arabia has taken a $300 million stake in the social media start-up Twitter, adding an emerging brand name to an international investment portfolio that largely includes established giants like Apple, Citigroup and Walt Disney.
Although the billionaire investor has long been known for taking stakes in stalwarts, the Twitter deal focuses on the next generation of blue-chip companies.
The five-year-old microblogging site, which now has more than 100 million active users, has quickly evolved into a ubiquitous communications tool, allowing individuals and companies to broadcast and share information in real-time. During the Arab Spring, revolutionaries embraced Twitter as a means to galvanize support and organize protests.
In his statement on Monday, the prince said the purchase was part of an effort to “invest in promising, high-growth businesses with a global impact.”
Although Prince Walid does not seem to be a member of the social network, his wife, Princess Ameerah Al-Taweel is an avid user with more than 84,000 followers. On Monday, she sent out a Twitter message, calling her husband’s social networking investment “a great planned move.”
Along with Facebook and Zynga, Twitter is part of an elite group of Internet companies that has rapidly attracted users and raised money at multibillion-dollar valuations. Prince Walid purchased shares from early investors in Twitter, a deal that values the company at $8.4 billion, according to two people with knowledge of the matter.
The investment by Prince Walid and his investment company Kingdom Holding is a strong vote of confidence for Twitter at a time when other Internet darlings are stumbling. At $8.4 billion, Twitter is now worth more than Zynga, the profitable gaming company that went public last week. Shares of Zynga have fallen roughly 10 percent from their offering price, putting its market value at $6.3 billion.
Twitter, meanwhile, is still shaping its business model. The service, which began selling ads in 2010, makes the bulk of its money from sponsored messages and accounts, in which companies pay to promote their brands through users’ feeds and landing pages.
Sales remain modest compared to rival Facebook, but they are steadily climbing. Twitter is expected to record $139.5 million in ad revenue sale this year, according to the research firm eMarketer, and nearly double that in 2012.
“We believe that social media will fundamentally change the media industry landscape in the coming years,” said Ahmed Reda Halawani, Kingdom Holding’s executive director of private equity. “Twitter will capture and monetize this positive trend.”
Twitter is also gaining traction in the Arab world, where it was credited with playing a role in this year’s social uprisings across North Africa and the Persian Gulf. Arabic-language messaging is the fastest-growing segment on Twitter, according to the data intelligence company Semiocast. The volume of Arabic messages increased 2,146 percent in the 12 months ending Oct. 31.
But the network’s rising profile has also attracted the ire of some governments, which see the service as a destabilizing agent. In January, Twitter was briefly blocked in Egypt, after a wave of protests. It is banned in China, a country that has stifled several Internet sites.
While Prince Walid is known as an outspoken investor, few expect the Saudi royal to use his minority stake to influence the company’s politics. His wife seemed to back that sentiment on Monday, rebroadcasting messages from other Twitter users that described the deal as a financial — and not political — transaction.
“This seems to be more about good business,” said Michael Gartenberg, a Gartner analyst. “Clearly, he believes that Twitter is not a passing fad but a cornerstone of the consumer social network experience.”
Unlike many of its peers, Twitter does not seem to be rushing to go public. After raising hundreds of millions of dollars, the company has some time before it needs to tap the markets.
In the summer, the company raised $800 million from other private investors, led by DST Global, the venture capital firm headed by the Russian billionaire Yuri Milner. As part of the transaction, Twitter issued $400 million in new shares, while early shareholders sold the rest.
“They haven’t figured out a scalable revenue model yet, that is particularly aggressive,” said Ben Schachter, a Macquarie Securities analyst. “Staying private gives them the opportunity to figure out how to make things work, without the pressure of the public markets.”
Michael J. de la Merced contributed reporting.