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Can I ask what the $4 in profit and 30M nights/ year to justify $2B valuation are based on? Just wondering if maybe my math/ view on it is wrong... Looks like

Can I ask what the $4 in profit and 30M nights/ year to justify $2B valuation are based on? Just wondering if maybe my math/ view on it is wrong... Looks like they charge a 3% fee meaning a night @ $100 would bring in $3 of revenue (not profit). At 30M nights that's $90M in revenue, putting the $2B valuation at 22.2x revenue... seems slightly unreasonable (at least not a valuation that public markets are likely to put on it). Thoughts?

rdl 14y ago
20 p/e is awesome for a business which is growing "e" very fast, and in what appears to be a sustainable way. Look at AMZN's p/e...
- vikramhaer 14y ago
  but it's not really earnings is it? that's 20x revenue, so even with really good margins that would be at least double. You're right that amazon's P/E is insanely high, but on a revenue basis they trade at 1.5-2.0x. I guess with the kind of growth AirBnB has there's nothing really comparable... just trying to understand how they're justifying that valuation
mrgordon 14y ago
From the article: "The company takes an average of 10% on every transaction, according to sources familiar with the business" Your numbers start to look a lot better at a 10% fee instead of a 3% fee.
- vikramhaer 14y ago
  yeah, was confused by that part a bit, since their website mentions 3%. perhaps that's just the listing fee vs. how much they make for each night someone stays at a listing...
  - richiezc 14y ago
    disclosure: ex-Airbnb employee here The total airbnb fee on a stay is about 12% (lets assume 9% avg guest fee and 3% host fee). But roughly 3% goes to credit card processing fees and then you have to deal with paying out in countries like Brazil where paypal and ACH aren't viable options. Lets just net it out to 9% for discussion purposes. Average price per booked night when I worked there was $100+. If you do the same math as the post above then revenue would hypothetically be $270MM, as a revenue multiplier the range we're talking about begins to seem possible for a company on this trajectory with organic growth. I have a vested interest in a high valuation, but having seen the growth from when I first joined (feb 2011, celebrated 1MM nights booked the first week I was there) to now its really unbelievable - true hockeystick growth.
    - vikramhaer 14y ago
      That makes a lot more sense. I realized my mistake after going back to the site and noticing that guests are charged a fee as well. It's still pretty crazy on a rev multiple basis but the company's growth is ridiculous as well. Thanks for the insight.
      - richiezc 14y ago
        http://abovethecrowd.com/2011/05/24/all-revenue-is-not-created-equal-the-keys-to-the-10x-revenue-club/ http://abovethecrowd.com/2011/05/24/all-revenue-is-not-creat... see: (1) network effects (2) organic demand

rdl 14y ago

20 p/e is awesome for a business which is growing "e" very fast, and in what appears to be a sustainable way. Look at AMZN's p/e...

vikramhaer 14y ago
but it's not really earnings is it? that's 20x revenue, so even with really good margins that would be at least double. You're right that amazon's P/E is insanely high, but on a revenue basis they trade at 1.5-2.0x. I guess with the kind of growth AirBnB has there's nothing really comparable... just trying to understand how they're justifying that valuation

mrgordon 14y ago

From the article: "The company takes an average of 10% on every transaction, according to sources familiar with the business" Your numbers start to look a lot better at a 10% fee instead of a 3% fee.

vikramhaer 14y ago
yeah, was confused by that part a bit, since their website mentions 3%. perhaps that's just the listing fee vs. how much they make for each night someone stays at a listing...
- richiezc 14y ago
  disclosure: ex-Airbnb employee here The total airbnb fee on a stay is about 12% (lets assume 9% avg guest fee and 3% host fee). But roughly 3% goes to credit card processing fees and then you have to deal with paying out in countries like Brazil where paypal and ACH aren't viable options. Lets just net it out to 9% for discussion purposes. Average price per booked night when I worked there was $100+. If you do the same math as the post above then revenue would hypothetically be $270MM, as a revenue multiplier the range we're talking about begins to seem possible for a company on this trajectory with organic growth. I have a vested interest in a high valuation, but having seen the growth from when I first joined (feb 2011, celebrated 1MM nights booked the first week I was there) to now its really unbelievable - true hockeystick growth.
  - vikramhaer 14y ago
    That makes a lot more sense. I realized my mistake after going back to the site and noticing that guests are charged a fee as well. It's still pretty crazy on a rev multiple basis but the company's growth is ridiculous as well. Thanks for the insight.
    - richiezc 14y ago
      http://abovethecrowd.com/2011/05/24/all-revenue-is-not-created-equal-the-keys-to-the-10x-revenue-club/ http://abovethecrowd.com/2011/05/24/all-revenue-is-not-creat... see: (1) network effects (2) organic demand