12.21.2011

New Media Wins Investors

12.21.2011
Terry Flanagan

The social media-private equity partnerships continue as the sector springs its way to fruition.

With a reported 750 million users on Facebook, and 250 million daily “tweets” posted to Twitter, social media’s penetration into the lives of everyday people continues to grow. So has the interest from investors.

Saudi Arabian Prince Alwaleed bin Talal has made a $300 million investment in Twitter. According to some sources, the decision to invest for the chief executive and majority stakeholder of the Kingdom Holding Company, a sovereign holdings company, originated from “an observation that social media sites were widely used by activists in this year’s Arab uprisings.”

For many in the Gulf region, Alwaleed’s status as an investor is not unlike Warren Buffet in the U.S. As the richest person in Saudi Arabia, he is highly reveled for his successful investments in real estate, and the equities market, primarily in media companies.

The Prince’s current investment in Twitter was added to a roster of investments from private equity firms. Twitter also raised $400 million from a direct investment led by Russia-based investment firm, Digital Sky Technologies (DST) Global. DST Global has also made investments in social media companies including Facebook, and ZocDoc.

San Francisco-based Twitter was reportedly valued at $8.4 billion as of last October, according to The Wall Street Journal. This suggests that Prince Alwaleed’s stake is equivalent to 3.6% of the company.

Whether market participants believe social media is a boom or bust, a wide range of investors are drinking the sector’s Kool-Aid. The latest new tech/social media company to go public is online travel guide, TripAdvisor, which began trading on the Nasdaq as of December 21.

“TripAdvisor embodies the innovative and progressive drive that is characteristic of NASDAQ-listed companies,” said Bob McCooey, a spokesperson for Nasdaq.“Because of these qualities, NASDAQ is happy to announce that TripAdvisor is the official travel review site of The NASDAQ Stock Market.”

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