4 ms·

I’m dumbstruck by a more fundamental question — Is it even meaningful for a company to be valued at ~$30B if it cannot guarantee survival & stability? In what s

I’m dumbstruck by a more fundamental question — Is it even meaningful for a company to be valued at ~$30B if it cannot guarantee survival & stability? In what sense of reality is this a “unicorn”? EDIT: Yes, I understand the math of (ensemble-averaged) expected values. My point is that such a calculation (for a high variance distribution) is useless/pointless/stupid/<adjective of choice> (basically a bad model) for anyone for whom their AirBnB investment is more than a small/marginal part of their portfolio. In particular, it’s a dangerously misleading number to anyone who has a large fraction of their personal wealth invested in AirBnB (including employees & founders, or potential retail investors who might invest directly in the company at IPO, rather than through index funds) Refer the St. Petersburg paradox.

fitbitq 6y ago
No company can guarantee this.
chadwittman 6y ago
I'm not commenting on the specific valuation, but I think you're looking at their valuation without probabilities priced in. A $30b valuation is a very rational valuation if you assessed there was a 50% chance of a $0 valuation and a 50% chance of a $60b valuation.
- erichocean 6y ago
  "You should sink $30B into an investment that has a 50% chance of going to zero, that's very rational." — some HN commenter
  - vikramkr 6y ago
    Yes, it is rational, because of the other 50% chance. Welcome to finance. If you think a 50% chance of going to zero is bad, well, wait till you find out about some of the derivatives people trade. And hey, at least the value of this asset doesn't go below 0!
    - erichocean 6y ago
      "Please go into finance." — Everyone else in the market
- vikramkr 6y ago
  Well, you'd also have to have 100% risk tolerance for that to make sense. Something like 50% chance of 0 and 50% chance of 100 billion might be more realistic for a binary outcome valuation like that.
JumpCrisscross 6y ago
> it’s a dangerously misleading number to anyone who has a large fraction of their personal wealth invested in AirBnB Nobody rational with a significant amount of their wealth in a $30bn company hasn't already taken some chips off the table. Whether through cash bonuses, loans, tendered shares or secondary sales.
deleted 6y ago
[deleted]
switch11 6y ago
Good Question: ssivark 2 hours ago [–] Is it even meaningful for a company to be valued at ~$30B if it cannot guarantee survival & stability? In what sense of reality is this a “unicorn”? * Fed is printing infinite money So $30 billion is not $30 billion AirBnB offers the potential of high upside Do you park your 'free, Feb printed money' in the bank, and then at some point its value is less than it started Or do you park it in AirBnB or another IPO, where it might go to zero, or it might go ten times Everywhere IPOs are booming. Because money is being printed and there is nowhere for it to go for a good return

fitbitq 6y ago

No company can guarantee this.

chadwittman 6y ago

I'm not commenting on the specific valuation, but I think you're looking at their valuation without probabilities priced in. A $30b valuation is a very rational valuation if you assessed there was a 50% chance of a $0 valuation and a 50% chance of a $60b valuation.

erichocean 6y ago
"You should sink $30B into an investment that has a 50% chance of going to zero, that's very rational." — some HN commenter
- vikramkr 6y ago
  Yes, it is rational, because of the other 50% chance. Welcome to finance. If you think a 50% chance of going to zero is bad, well, wait till you find out about some of the derivatives people trade. And hey, at least the value of this asset doesn't go below 0!
  - erichocean 6y ago
    "Please go into finance." — Everyone else in the market
vikramkr 6y ago
Well, you'd also have to have 100% risk tolerance for that to make sense. Something like 50% chance of 0 and 50% chance of 100 billion might be more realistic for a binary outcome valuation like that.

JumpCrisscross 6y ago

> it’s a dangerously misleading number to anyone who has a large fraction of their personal wealth invested in AirBnB Nobody rational with a significant amount of their wealth in a $30bn company hasn't already taken some chips off the table. Whether through cash bonuses, loans, tendered shares or secondary sales.

deleted 6y ago

[deleted]

switch11 6y ago

Good Question: ssivark 2 hours ago [–] Is it even meaningful for a company to be valued at ~$30B if it cannot guarantee survival & stability? In what sense of reality is this a “unicorn”? * Fed is printing infinite money So $30 billion is not $30 billion AirBnB offers the potential of high upside Do you park your 'free, Feb printed money' in the bank, and then at some point its value is less than it started Or do you park it in AirBnB or another IPO, where it might go to zero, or it might go ten times Everywhere IPOs are booming. Because money is being printed and there is nowhere for it to go for a good return