What next for Kingdom Holding’s $2bn X investment?

Jim Watson/AFP/Getty Images/TNS/Alamy Live News

• Reported loss of 70% in two years
• Users supposedly fleeing
• Possible boost from Trump victory

When Elon Musk took ownership of Twitter in 2022 for $44 billion, he did so with the help of Saudi Arabia’s Prince Alwaleed bin Talal and his Kingdom Holding, which put up nearly $2 billion of the price, and the Qatar Investment Authority, which handed over $375 million.

The investment made the Saudi company the second-biggest shareholder in the social media giant.

However, in the two years since Musk paid the equivalent of $170 per active user for the microblogging site, the company has tanked. 

Twitter – rebranded by Musk as X – is not listed, so financial disclosures are limited. But Fidelity International said in a report in September that the company had lost at least 70 percent of its value.

That means Kingdom Holding, which has owned a stake in Twitter/X since 2015, has lost about $1.4 billion on its investment with Musk in 2022 of $1.89 billion, and the Qatar Investment Authority $270 million. 

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In total, Musk and his partners in the purchase, including Kingdom Holding, are thought to have lost around $24 billion, as advertisers have fled Twitter while it undergoes sweeping changes to moderation and monetisation, and internal changes that have shrunk its workforce.

Most of X’s value was lost before Musk began his foray into US politics and used his 206-million-follower X account as a platform to lobby for the re-election of Donald Trump. 

Despite X’s role in the US election and its chairman’s proximity to President-elect Trump, Saudi and Qatari investors are still unlikely to recuperate their initial investment in the platform, experts have told AGBI – even if the platform is once again used by Trump as a major communication channel.

Lucy Chow, general partner of the WBAF Angel Investment Fund, which has a country office in Bahrain, says that Trump’s return to the platform is crucial if it is to stand a chance of making returns for investors. X, she says, still has lots of utility in emerging markets around the world, and value as a source of real-time information. 

“If, like in his first term in office, Trump decides to use the microblogging site as his political communication channel, then that will only amplify the relevance of the platform. Trump draws both detractors and supporters onto the Twitter platform,” she says. 

Chow says that Trump will help increase engagement levels, but to recoup any initial investment, Musk will need to adapt how he makes money from the platform.

Musk has already been exploring subscription and premium features. The billionaire inventor introduced a paid-for blue tick shortly after taking control. These efforts, however, appear to be making only limited progress. In 2023 X reported revenues of only $3.4 billion, a drop of 22 percent from the previous year.

Kumardev Chatterjee, CEO of the consultancy Blue Hat Founders and a member of the World Economic Forum Expert Network, points to another tension: Trump and Musk both run social media platforms, in Trump’s case Truth Social.

“It might seem inevitable that with Trump’s support X’s fortunes will now make a turn for the better, [but] the hard facts are that what’s good for X is bad for Truth Social,” Chatterjee says. 

“This is even more the case now that there’s yet another large exodus of more temperate individuals and reputation-sensitive businesses from X to other platforms, notably Bluesky.”

Bluesky, a social media platform similar to X, is reportedly adding 1 million users a day. This migration, if it persists, will leave “X and Truth Social focused on competing for the same core vocal base of members who are avid Trump supporters,” Chatterjee warns.

Inevitable decline

At this point X’s investors, he says, will “probably just settle for a stop to further inevitable decline. Beyond that, certain key investors would be able to perhaps gain value from closer proximity to the Trump administration – if not Trump himself.” 

However, Chatterjee points out, the major Saudi and Qatari investors in X – Kingdom Holding and the QIA – already have that sort of access and proximity.

Lucy Chow says there may be more on the line than just X itself. She believes that SpaceX, Tesla, and Musk’s other projects could benefit from having Trump in office, perhaps making up for the billionaire’s initial $44 billion investment into Twitter/X. 

Kingdom Holding seems to be backing that assumption, participating in a $6 billion funding round for Musk’s xAI platform in May. 

Chow says that while profits may not flow from X itself, investors can more than recoup their investments via Musk’s other businesses.

“Honestly, I assume investors into Twitter/X are also investing in Musk’s other businesses,” she says.