Prince Alwaleed bin Talal, the Saudi billionaire who invested $300 million in Twitter Inc. (TWTR) two years ago, said the company needs to focus on making money after raising $1.82 billion in an initial public offering.
“The question right now is how to look at the monetization process,” Alwaleed said in an interview on the “Charlie Rose” show on Bloomberg Television. “Twitter is at the beginning of its journey. It has a lot of money in the bank right now, but its penetration in the U.S. and the world is still minimal, so there’s still a lot of potential to grow.”
Alwaleed, who also owns stakes in Apple Inc. and Citigroup Inc. (C), and his investment company agreed to buy a $300 million stake in the microblogging service in December 2011. The shares jumped 73 percent in its trading debut on Nov. 7, after the company sold about 70 million shares to investors in the IPO.
By hanging on to his stock, Alwaleed and other Twitter insiders showed they’re bullish about the unprofitable San Francisco-based company’s ability to wring earnings out of its more than 200 million users. That contrasts with Facebook Inc., whose investors such as Accel Partners and Goldman Sachs Group Inc. ended up selling more shares than initially planned in that company’s May 2012 IPO, according to filings.
“When we analyzed Twitter, we believed in its business model,” Alwaleed said. “You bet on the company and that the monetization process is going to be successful. We’re seeing some success in that process.”
The company, which has one-fifth as many users as Facebook, is benefiting from investors’ thirst for companies that will grow quickly in expanding markets like mobile advertising.
Twitter still needs to deliver on its business model. While revenue has surged, reaching $534.5 million in the 12 months that ended Sept. 30, user growth is slowing, filings show. The service had 231.7 million monthly users in the quarter that ended in September, up 39 percent from a year earlier. That compares with 65 percent growth in the prior year.
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