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Is a Key Twitter Investor Already Selling Off Its Stock?

Unconfirmed rumors from Business Insider last week indicate that leading Twitter investor Kleiner Perkins is selling off Twitter stock on the secondary market – just months after making its investment.

Twitter raised $200 million at a valuation of $3.7 billion on December 15th, 2010 with Kleiner Perkins as the lead investor in Twitter. The investment firm, headed up by notable tech investor John Doerr, contributed $150 million to the deal.

Now, Business Insider’s CEO and Editor in Chief Henry Blodget is reporting that Kleiner Perkins has begun dumping its Twitter stock, just three months after its initial investment. Blodget cites reliable sources with second-hand knowledge of the deal as his source of information.

The investment firm is apparently selling its stock on the secondary private markets, and Blodget makes a reasonable assumption why: in the past three months, Twitter’s valuation has skyrocketed. The initial $3.7 valuation when Kleiner Perkins invested has jumped to almost $8 billion on the secondary markets.

By selling now, Kleiner Perkins stands to more than double their investment, and get some cash out of the Twitter deal.

The fact that a key Twitter investor is cashing out now is worrisome for the company. Although, as Blodget notes, Kleiner Perkins did not have an official board member sitting in at Twitter’s board meetings, John Doerr did often “observe” these meetings, and he had an intimate knowledge of Twitter’s financials. Selling now shows a lack of faith that Twitter’s business model – which relies heavily on selling Promoted Products and tweets from the firehose – will pan out.

The stock sale is unconfirmed as of Monday morning.

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