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TechAirbnb

Here’s how Airbnb justifies its eye-popping $24 billion valuation

By
Kia Kokalitcheva
Kia Kokalitcheva
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By
Kia Kokalitcheva
Kia Kokalitcheva
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June 17, 2015, 4:46 PM ET
Airbnb MGM Grand Signature Las Vegas
An Airbnb listing at the MGM Grand Signature in Las Vegas, Nevada.Courtesy of Airbnb

Home-sharing company Airbnb is making the investor rounds to scoop up new cash, and it’s got some bold revenue predictions to make its case.

The seven-year-old company is apparently telling investors that it’s on track to make $900 million in revenue this year, up from the $850 million figure it predicted in recent months, The Wall Street Journal reported Wednesday, citing anonymous sources. In 2013, Airbnb’s revenue was $250 million — about a third of that amount.

Moreover, the company is saying its annual revenue will grow to $10 billion by 2020, and that it will become profitable at that time. Right now, the company is burning cash to expand, and is forecasting an operating loss of about $150 million for 2015, the Journal noted.

Douglas Quinby, an analyst with research firm Phocuswright, told the paper that Airbnb would need to increase its share of the global lodging market from 1% to as much as 10% over the next five years in order to reach its lofty revenue goals.

The newspaper also offered some context around the projected revenue numbers. The Marriott (MAR) hotel chain, for example, which has more than 4,000 hotels, made $13.8 billion in revenue last year and is valued at $21 billion, the paper said, while Priceline (PCLN), an online service that helps customers book flights and accommodations, has a market value of $61 billion.

Despite Airbnb’s projected growth, it’s still facing regulatory difficulties in many of its markets around the world, and depending on where it finds itself in these various regulatory frameworks, its ability to reach those projections could be affected.

Airbnb is expected to shortly close a $1 billion funding round at a $24 billion valuation, the newspaper said.
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