Billionaire investor Prince Alwaleed values Twitter at $15bn but doubts from the market remain

 

Billionaire investor Alwaleed bin Talal has given a public vote of confidence in microblogging site Twitter’s upcoming IPO, stating that he does not intend to sell any of his shares in the site when it hits the market.

Prince Alwaleed, the nephew of Saudi Arabia's King Abdullah, invested $300 million in the social media giant in late 2011. His investment company Kingdom Holding is closely watched by the international markets following its successful investments in companies such as Citigroup and News Corp.

"Twitter is a very strategic investment for us,” said Alwaleed in a telephone interview with Reuters. “We believe that it is just beginning to touch the surface. We have invested $300 million in the company. We will be selling zero, nothing, at the IPO."

Twitter announced that it had filed for an initial public offer of shares by tweet on Thursday, with the market expecting that once listed the company will be valued at more than $10 billion.  Alwaleed, however, expects that even this is a conservative estimate:

"We hear that the company is valued at $14 billion-$15 billion but there have been trades above this valuation. We believe it might be worth more than that,” said the Prince. "With the 300 million customers they have and half a billion tweets a day, the growth potential is tremendous.”

The hype surrounding the IPO has invited comparisons with Facebook, whose 2012 stock market debut was subject to an inflated valuation that quickly crashed. The company’s share price slowly recovered due to mobile advertising revenue and last week hit a record high of $45.

 Alwaleed seems to have taken these comparisons on board, saying: "In my discussion with Mr Costolo [Twitter’s CEO] and the management of Twitter, I cautioned them to be very careful and not to repeat the mistakes of Facebook. […] The lessons are not to brag too much, don't be greedy - I mean price it right and be realistic."

However, there are already rumbles of complaint surrounding Twitter’s decision to file its IPO confidentially. Usually companies have to publish hundreds of pages of documents clearly outlining their financial situation and potential risks months before an IPO so that investors and journalists can analyse their valuation.

Instead, the microblogging site took advantage of America’s Jumpstart Our Business Startups (JOBS) Act, a piece of legislation that means the site can withhold this information until 21 days before its ‘roadshow’ to investors, an event that can come just days before the shares go on sale.

The Financial Times summarised much of the worry surrounding the IPO with the headline “Twitter’s short and simple tweet fails to answer key questions”.

Other analysts are worried less about the company obscuring financial shortcomings and more about the threat to the quality of the service it provides. Writing for Wired, Marcus Wohlsen notes that after the IPO Twitter will be beholden to shareholders demanding a return on their investment, causing the company to introduce more adverts to boost revenue:

“More ads on Twitter means more money for Twitter, which makes shareholders happy. But more ads on Twitter will make users less happy, which means fewer users. Fewer users mean lower ad rates, which makes shareholders unhappy — a vicious cycle,” says Wohlsen.

ebooks
ebookA delicious collection of 50 meaty main courses
Life and Style
ebookNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Gadgets & Tech

    SThree: Trainee Recruitment Consultant - Dublin

    £13676.46 - £16411.61 per annum + OTE: SThree: SThree Trainee Recruitment Cons...

    Ashdown Group: Database Analyst - Birmingham - £22,000 plus benefits

    £20000 - £22000 per annum + excellent benefits: Ashdown Group: Application Sup...

    SThree: Recruitment Resourcer

    £20000 - £25000 per annum + Uncapped Commission: SThree: Do you want to get in...

    SThree: Recruitment Consultant - IT

    £25000 - £30000 per annum + Uncapped Commission: SThree: Sthree are looking fo...

    Day In a Page

    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'
    Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

    Flesh in Venice

    Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
    11 best anti-ageing day creams

    11 best anti-ageing day creams

    Slow down the ageing process with one of these high-performance, hardworking anti-agers
    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever