Airbnb IPO Date Faces Delay as Company Receives $24 Billion Valuation

Airbnb Inc. is reportedly in talks to raise $1 billion in venture capital according to The Wall Street Journal. That amount of funding would value the tech startup at roughly $24 billion.

Unfortunately for investors, that means the Airbnb IPO date will be pushed back again.
Airbnb is an online rental service that allows homeowners to list their homes and apartments for short-term stays. The service is available in more than 190 countries. More than 35 million guests have used the service since its founding in 2008. The site also has more than 1.2 million listings.

airbnb ipo dateThe company is growing at an incredible rate. In April 2014, Airbnb was valued at just $10 billion. At $24 billion, Airbnb would be the third highest-valued startup in the world.

The company hasn't commented on who's behind this latest round of funding. Airbnb has previously been funded by Sequoia Capital and Andreessen Horowitz.

Airbnb generates revenue by taking a 3% fee from every booking. Service fees between 6% and 12% are also applied to each guest.

According to The Journal, Airbnb representatives said they expect $900 million in revenue for 2015. In 2013, the company had revenue of just $250 million.

They also expect revenue of $10 billion by 2020. At that point, the company will have earnings of more than $3 billion. The company isn't profitable yet though and expects a loss of $150 million in 2015.

To put those numbers in perspective, one of the world's largest hospitality companies, Priceline Group Inc. (Nasdaq: PCLN) expects revenue of $9 billion this year and has a market cap of $60 billion.

"We're still very much in the early days of travelers being aware of and considering Airbnb for their next trip," Lodging Advisors LLC's Sean Hennessey told The Journal. "They could achieve a sizable amount of market share as the market grows and as their mind-share grows."

While the expectations for Airbnb's growth are enormous, there are still two major problems that the company needs to sort out as the Airbnb IPO date approaches...

Why the Airbnb IPO Date Could See More Delays

Airbnb is often referred to as the "Uber for hotels." Like Uber, Airbnb relies heavily on a younger, tech-focused user base. The service allows users to rent a room "on demand" through a free mobile app or on the company's website.

Airbnb is also taking on some very entrenched competition in the hospitality business.

While Uber competes with the taxi and limousine industries, Airbnb is fighting for market share with major hotel chains like Marriott International Inc. (Nasdaq: MAR), Hyatt Hotels Corp. (NYSE: H), and Hilton Worldwide Holdings Inc. (NYSE: HLT).

Airbnb is already on par with those companies in terms of valuation. Airbnb is bigger than Hyatt and Marriott, which have market caps of $21 billion and $8 billion respectively. And it's not far behind Hilton at $27.6 billion.

But that's not the only problem it has to sort out before the Airbnb IPO date...

Airbnb is also facing some major regulation issues.

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In October 2014, New York Attorney General Eric Schneiderman alleged that roughly 72% of New York City Airbnbs either violated zoning or other laws. He claimed that some landlords were running what amounted to illegal hostels.

Other cities like Berlin and Santa Monica, Calif., have also tried to place regulatory restrictions on Airbnb services.

The Bottom Line: It's clear that Airbnb stock has serious potential when it comes on the market. The company is growing at an incredible rate and is already generating nearly $1 billion in revenue. But the company needs to prove it can sustain competition from some of the world's biggest hotel chains and fight off regulatory restrictions. For now, it looks like the Airbnb IPO date could be pushed back to 2016.

Follow me on Twitter @KyleAndersonMM.

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