Here’s Why Al-Walid Bin Talal is Buying Twitter, Inc. (NYSE:TWTR)
Billionaire Al-Walid Bin Talal Likes Twitter Inc; Should You, Too?
Saudi billionaire Al-Walid Bin Talal and his group, Kingdom Holding Company (KHC), announced on Wednesday that the company has increased its stake in Twitter, Inc. (NYSE:TWTR) to become the microblogging company’s second-largest shareholder. Only Evan Williams, co-creator of Twitter, has more Twitter stock, owning more than 6.81% of the shares.
Over the past few weeks, the famous investor has increased his shares to over 34 million, amounting to a five percent stake in Twitter. On Tuesday, Twitter stock closed at $27.62 in New York, meaning that the prince’s holding is worth $965 million. On Wednesday, news of the share purchase sent TWTR stock flying. It closed at $29.84—8.04% higher, a level not seen since last August.
Look Who’s Betting on a Twitter Stock Breakout
Bin Talal was one of the first to see the power of the social media outlet, investing in Twitter stock since 2011, two years before its initial public offering (IPO)! KHC is no small player; it has sizeable investments in Euro Disney, the Four Seasons hotel chain, and Citibank. Prince Walid’s decision to invest in Twitter just two days after Jack Dorsey was confirmed as CEO suggests the famous investor is confident about the company’s future. This ended the period of leadership limbo following the resignation of former incumbent Dick Costolo. Moreover, TWTR stock could see a rise back up to its yearly highs, implying a doubling of the value.
Prince Al-Walid, evidently bullish on Twitter stock, is also using the company as a platform for a major shopping trip in Silicon Valley, where he is eyeing other firms in the social media sector. Last March, he met the co-creator of Snapchat to discuss economic cooperation potential in technology. (Source: The Telegraph, March 9, 2015.)
With over $20.0 billion, Prince Al-Walid Bin Talal Bin Abdulaziz Al-Saud is the richest Saudi citizen. The royal family’s wealth is rather cryptic; among one of the top 50 richest people in the world. He is the nephew of former King Abdullah. He is also a major shareholder in Citigroup, PepsiCo, Apple, Hewlett Packard, eBay, and News Corp.
Like many self-made men, Al-Walid exercises influence. He has a special relationship with the media. He is a news-addict, and even if he has remained modest enough, his relationship with the media may have inspired him to invest in this strategic sector, including its hard news and entertainment components.
In 1993, Al Walid bought a 30% share in the Arab Radio and Television Network (ART) for $240 million. A few years later, he acquired 100% of Rotana Audiovisual Company, which includes, among others, the largest music label artists of the Maghreb and the Near and Middle East. But while his interest in Rotana is growing along with investing more and more money, he has began to doubt the potential of ART. ART has now become an Arabic-language music channel, broadcasting 24 hours a day.
Apart from a number of media outlets in the Middle East, including the Lebanese Broadcasting Corporation, Al-Walid owns a 2.3% stake in Mediaset (founded and controlled by Silvio Berlusconi). The Prince also has long invested in News Corp., and to date holds a seven percent stake in the company founded by Rupert Murdoch.
To better understand Twitter’s appeal in Saudi Arabia, consider that King Salman is as (if not more) popular as President Obama. On average, the Saudi monarch’s messages are retweeted or shared more than Obama’s. (Source: New Saudi King Amasses Twitter Following, The Wall Street Journal, Jan 28, 2015.) For example, the tweet announcing Salman’s accession to the throne in January 2015 was retweeted 380,000 times. This is second only to the number of times the famous photo of Barack Obama hugging his wife Michelle just after his re-election in 2012 was retweeted.
Twitter is a favorite among political leaders, such that some have coined the term “Twiplomacy.” This is the art of diplomacy in 140 characters. Barack Obama and Pope Francis still occupy the top spots of the poster with some 57 million subscribers, while the second has almost 20 million followers. Newcomer Indian Prime Minister Narendra Modi, with his 10 million followers, is the third most popular leader on Twitter.
“The populous countries with high network penetration have an advantage. Moreover, in some countries, the hearing of the President is a matter of national honor,” says the study by communications agency Burson-Marsteller.
Here’s the Bottom Line on Twitter Stock
The initiator of this project, Matthias Lüfkens, says, “Twitter is a fascinating reflection of international relations.” (Source: Deutsche Welle, June 27, 2014.) The rapprochement between Iran and the United States has coincided with the connections between leaders of the two countries over Twitter. In September 2013, the U.S. State Department started following President Rohani, and Foreign Minister Mohammad Javad Zarif, who was following Secretary of Foreign Affairs, John Kerry.
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